-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KD17eQJOmcW5g44O/Ub+TlR1N4biF6zhbtFgyLq8zz9+6EwwI6kwWqXCCwUEwhdG 37d62GWbD1DPJXli5SZ8qA== /in/edgar/work/20000609/0000927016-00-002126/0000927016-00-002126.txt : 20000919 0000927016-00-002126.hdr.sgml : 20000919 ACCESSION NUMBER: 0000927016-00-002126 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 14 CONFORMED PERIOD OF REPORT: 20000526 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000609 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PREMIUMWEAR INC CENTRAL INDEX KEY: 0000069067 STANDARD INDUSTRIAL CLASSIFICATION: [2320 ] IRS NUMBER: 410429620 STATE OF INCORPORATION: DE FISCAL YEAR END: 0102 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-00063 FILM NUMBER: 652547 BUSINESS ADDRESS: STREET 1: 5500 FELTL ROAD CITY: MINNETONKA STATE: MN ZIP: 55343 BUSINESS PHONE: 9529791700 MAIL ADDRESS: STREET 1: 550 FELTL ROAD CITY: MINNETONKA STATE: MN ZIP: 55343 FORMER COMPANY: FORMER CONFORMED NAME: MUNSINGWEAR INC DATE OF NAME CHANGE: 19920703 8-K 1 0001.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (date of earliest event reported): May 26, 2000 PremiumWear, Inc. ------------------------------------------------------------ (Exact name of Registrant as specified in its charter) Delaware 000-28501 41-0429620 -------- --------- ---------- (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification No.) 5500 Feltl Road Minnetonka, Minnesota 55343-7902 --------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 1-800-248-0158 or (952) 979-1700 Item 1. Not Applicable. -------------- Item 2. Not Applicable. -------------- Item 3. Not Applicable. -------------- Item 4. Not Applicable. -------------- Item 5. Other Events. ------------ PremiumWear, Inc. (the "Company") has entered into an Agreement and Plan of Merger, dated as of May 26, 2000, by and among New England Business Service, Inc., Penguin Sub, Inc. and the Company (the "Merger Agreement") under which NEBS will acquire all outstanding shares of the Company for $13.50 per share, payable in cash. In accordance with the terms of the Merger Agreement, a subsidiary of NEBS will commence a tender offer for all of the outstanding shares of the Company's common stock at $13.50 per share in cash by no later than June 9, 2000. As part of the transaction with NEBS, the Chairman, the executive officers and certain employees of the Company have executed certain amendments to certain Change in Control Severance Agreements and entered into Employment or Consulting Agreements with the Company and NEBS. These agreements are described below. The agreements are also attached as exhibits and incorporated by reference herein. Employment Agreements and Change in Control Severance Agreements The Company has entered into Change in Control Severance Agreements with David E. Berg, Cynthia L. Boeddeker, James S. Bury, Thomas D. Gleason, Timothy C. Klouda and Dennis G. Lenz (collectively, the "Executives"). The agreements provide, among other things, for a lump sum cash severance payment to the Executives in the event of an involuntary termination of employment in connection with a change in control of the Company, as defined in the agreement, in an amount equal to two times the executives annual compensation. The Change in Control Severance Agreement with the Company's Chairman has substantially the same terms and conditions, except that the severance payment is triggered upon the change in control of the Company, irrespective of termination of employment. Each agreement also requires the Company to continue to provide the Executive, for a period of 24 months, with the benefits and perquisites that were provided to the Executive prior to the qualifying termination of employment. In addition, the agreements with Messrs. Gleason and Berg also provide for the Executive to receive a gross-up payment if the Executive becomes subject to excise tax as a result of any payments that the Executive receives under the agreement, or otherwise, which are determined to be "excess parachute payments." The agreements with the other Executives contain a limitation on the amount of any payments which constitute "excess parachute payments." The Executives who are parties to the Change in Control Severance Agreements, other than Mr. Gleason, have entered into First Amendments to their Change in Control Severance Agreements with the Company in connection with the Merger Agreement, pursuant to which such Executives have waived certain of their rights under their Change in Control Severance Agreements in exchange for new employment agreements. 2 In connection with the Merger Agreement, the Company has entered into Employment Agreements with each of David E. Berg, Cynthia L. Boeddeker, James S. Bury, Timothy C. Klouda and Dennis G. Lenz effective as of May 26, 2000. The term of the agreements with Mr. Berg and Ms. Boeddeker continue until June 30, 2003 and the agreements with Messrs. Bury, Klouda and Lenz continue until June 30, 2004, unless terminated as provided in the Agreement. The agreements generally provide for a base salary, plus eligibility for an annual executive bonus following the merger with NEBS, which is tied to the performance of the Company and NEBS, and a Special Incentive Plan based on the Company's performance, which will be paid in the form of restricted stock of NEBS for the fiscal years 2001 through 2003. In addition, each of the executives will receive an option grant to purchase shares of NEBS common stock following the merger with NEBS and will be paid the pro rata earned amount under the Company's 2000 Bonus Plan within 60 days after the merger with NEBS. Each of the agreements contains customary employment terms and provides that upon termination of employment by the Company without Cause or by the executive for Good Reason (as defined therein), the executive is entitled to his or her base salary for the remaining term of the Agreement, a pro rata bonus and continued benefits for the severance period, and accelerated vesting of stock options and restricted stock. Each of the executives are subject to customary confidentiality, non-competition and non-solicitation covenants and are entitled to certain indemnification protection. In connection with the execution of the Merger Agreement, Mr. Gleason, the Company's Chairman, entered into a consulting agreement with NEBS and the Company (the "Consulting Agreement"). The Consulting Agreement has a term of two years from the date of the Merger Agreement and provides, among other things, that Mr. Gleason will assist the Company in the transition following the Merger. In consideration for his services, Mr. Gleason will receive aggregate consulting and engagement fees of $582,500. The Consulting Agreement also subjects Mr. Gleason to customary confidentiality, non-competition and non-solicitation covenants and provides Mr. Gleason with indemnification protection. The Consulting Agreement supercedes Mr. Gleason's existing Change in Control Severance Agreement with the Company, unless the Merger with NEBS is not completed, in which case the Consulting Agreement will be of no effect, and the Change in Control Severance Agreement will be reinstated. Item 6. Not Applicable. -------------- Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. ------------------------------------------------------------------ Exhibit 99.1 Agreement and Plan of Merger, dated as of May 26, 2000, by and among New England Business Service, Inc., Penguin Sub, Inc. and PremiumWear, Inc. (incorporated by reference to Exhibit (d)(1) to the Schedule TO of New England Business Service, Inc. filed on June 9, 2000. Exhibit 99.2 Amended and Restated Change in Control Severance Agreement made and entered into by and between PremiumWear and Thomas D. Gleason effective as of April 18, 2000. 3 Exhibit 99.3 Amended and Restated Change in Control Severance Agreement made and entered into by and between PremiumWear and David E. Berg effective as of May 22, 2000. Exhibit 99.4(a)-(e) Employment Agreements made and entered into effective as of May 26, 2000 by and between PremiumWear, Inc. and (a) David E. Berg, (b) Cynthia L. Boeddeker, (c) James S. Bury, (d) Timothy C. Klouda and (e) Dennis G. Lenz. Exhibit 99.5(a)-(e) First Amendment to Change in Control Severance Agreement made and entered effective as of May 26, 2000 by and between PremiumWear, Inc. and (a) David E. Berg, (b) Cynthia L. Boeddeker, (c) James S. Bury, (d) Timothy C. Klouda and (e) Dennis G. Lenz. Exhibit 99.6 Consulting Agreement, dated as of May 26, 2000, between PremiumWear, Inc., New England Business Service, Inc. and Thomas D. Gleason. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PremiumWear, Inc. By /s/ James S. Bury ------------------ James S. Bury Vice President of Finance Dated: June 9, 2000 4 EX-99.2 2 0002.txt AMENDED AND RESTATED CHANGE IN CONTROL-T. GLEASON EXHIBIT 99.2 AMENDED AND RESTATED CHANGE IN CONTROL SEVERANCE AGREEMENT THIS AGREEMENT is made and entered into by and between PremiumWear, Inc., a Minnesota corporation with its principal offices at 5500 Feltl Road, Minnetonka, Minnesota (the "Company") and Thomas D. Gleason, residing at 656 Manhattan Road, Grand Rapids, MI 49506 (the "Executive"), amending and restating that agreement between the parties hereto dated as of September 28, 1999, and shall be effective as of the 17/th/ day of May, 2000. WHEREAS, the Company considers the establishment and maintenance of a sound and vital management to be essential to protecting and enhancing the best interests of the Company and its shareholders; and WHEREAS, the Executive has made and is expected to make, due to the Executive's intimate knowledge of the business and affairs of the Company, its policies, methods, personnel, and problems, a significant contribution to the profitability, growth, and financial strength of the Company; and WHEREAS, the Company, as a publicly held corporation, recognizes that the possibility of a Change in Control may exist, and that such possibility and the uncertainty and questions which it may raise among management may result in the departure or distraction of the Executive in the performance of the Executive's duties, to the detriment of the Company and its shareholders; and WHEREAS, the Company and the Executive entered into the original Agreement in September, 1999 and the Board, in February and April, 2000, approved additional changes to the Agreement as set forth in this amended and restated Agreement; and WHEREAS, it is in the best interests of the Company and its stockholders to reinforce and encourage the continued attention and dedication of management personnel, including the Executive, to their assigned duties without distraction and to ensure the continued availability to the Company of the Executive in the event of a Change in Control. THEREFORE, in consideration of the foregoing and other respective covenants and agreements of the parties herein contained, the parties hereto agree as follows: 1. Term of Agreement. This Agreement shall be effective from and after ----------------- the date hereof and shall continue in effect through December 31, 2001, and shall automatically be extended for successive one-year periods thereafter unless the Board of Directors of the Company (the "Board") shall have approved, and the Executive is notified in writing, prior to January 1, 2001 and each January 1 thereafter, that the term of this Agreement shall not be extended or further extended; provided, however, that if a Change in Control shall have occurred during the original or extended term of this Agreement, this Agreement shall continue in effect for a period of 24 months from the date of the occurrence of a Change in Control. In the event that one or more Change in Control events shall occur during the original or any extended term of this Agreement, the 24- month period shall follow the last Change in Control. This Agreement shall neither impose nor confer any further rights or obligations on the Company or the Executive on the day after the end of the term of this Agreement. Expiration of the term of this Agreement of itself and without subsequent action by the Company or the Executive shall not end the employment relationship between the Company and the Executive. Notwithstanding the foregoing, this Agreement shall terminate, be of no further force and effect, and no benefits shall be payable hereunder if, in connection with a Change in Control, Executive enters into a separate written agreement with the Company, or the successor as provided in Section 7 herein, effective upon a Change in Control, that provides compensation and benefits under terms and conditions comparable, in the aggregate, to the compensation and benefits and terms and conditions provided under this Agreement. 2. Change in Control. No benefits shall be payable hereunder unless ----------------- there shall have been a Change in Control. For purposes of this Agreement, a "Change in Control" of the Company shall mean a change in control which would be required to be reported in response to Item 6(e) on Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), whether or not the Company is then subject to such reporting requirement, including, without limitation, if: (a) Any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company, becomes a "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company's then outstanding securities; or (b) During any period of two consecutive years (not including any period ending prior to the effective date of this Agreement), the Incumbent Directors cease for any reason to constitute at least a majority of the Board of Directors. The term "Incumbent Directors" shall mean those individuals who are members of the Board of Directors on the effective date of this Agreement and any individual who subsequently becomes a member of the Board of Directors (other than a director designated by a person who has entered into agreement with the Company to effect a transaction contemplated by Section 2(c)) whose election or nomination for election by the Company's shareholders was approved by a vote of at least a majority of the then Incumbent Directors; or (c) (i) The Company consummates a merger, consolidation, share exchange, division or other reorganization of the Company with any corporation or entity, other than an entity owned at least 80% by the Company, unless immediately after such transaction, the shareholders of the Company immediately prior to such transaction beneficially own, directly or indirectly 51% or more of the combined voting power of resulting entity's outstanding voting securities as well as 51% or more of the Total Market Value of the resulting entity, or in the case of a division, 51% or more of the combined voting power of the outstanding 2 voting securities of each entity resulting from the division as well as 51% or more of the Total Market Value of each such entity, in each case in substantially the same proportion as such shareholders owned shares of the Company prior to such transaction; (ii) the shareholders of the Company approve an agreement for the sale or disposition (in one transaction or a series of transactions) of assets of the Company, the total consideration of which is greater than 51% of the Total Market Value of the Company, or (iii) the Company adopts a plan of complete liquidation or winding-up of the Company. "Total Market Value" shall mean the aggregate market value of the Company's or the resulting entity's outstanding common stock (on a fully diluted basis) plus the aggregate market value of the Company's or the resulting entity's other outstanding equity securities as measured by the exchange rate of the transaction or by such other method as the Board determines where there is not readily ascertainable exchange rate. 3. Termination Following Change in Control. If a Change in Control shall --------------------------------------- have occurred during the term of this Agreement, the Executive shall be entitled to the benefits provided in subsection 4(d) unless such termination is (A) because of the Executive's death, (B) by the Company for Cause or Disability, or (C) by the Executive other than for Good Reason. (a) Disability. If, as a result of incapacity due to physical or ---------- mental illness, the Executive shall have been absent from the full-time performance of the Executive's duties with the Company for at least six (6) consecutive months, and within 30 days after written Notice of Termination is given the Executive shall not have returned to the full-time performance of the Executive's duties, the Company may terminate the Executive's employment for "Disability". Any question as to the existence of the Executive's Disability upon which the Executive and the Company cannot agree shall be determined by a qualified independent physician selected by the Executive (or, if the Executive is unable to make such selection, it shall be made by any adult member of the Executive's immediate family), and approved by the Company. The determination of such physician made in writing to the Company and to the Executive shall be final and conclusive for all purposes of this Agreement. (b) Cause. For purposes of this Agreement, "Cause" shall mean: ----- (i) the willful and continued failure by the Executive (other than any such failure resulting from (1) the Executive's incapacity due to physical or mental illness, (2) any such actual or anticipated failure after the issuance of a Notice of Termination by the Executive for Good Reason or (3) the Company's active or passive obstruction of the performance of the Executive's duties and responsibilities) to perform substantially the duties and responsibilities of the Executive's position with the Company after a written demand for substantial performance is delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed the duties or responsibilities; 3 (ii) the conviction of the Executive by a court of competent jurisdiction for felony criminal conduct; or (iii) the willful engaging by the Executive in fraud or dishonesty which is demonstrably and materially injurious to the Company, monetarily or otherwise. No act, or failure to act, on the Executive's part shall be deemed "willful" unless committed, or omitted by the Executive in bad faith and without reasonable belief that the Executive's act or failure to act was in the best interest of the Company. The Executive shall not be terminated for Cause unless and until the Company shall have delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive's counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive's conduct was Cause and specifying the particulars thereof in detail. (c) Good Reason. The Executive shall be entitled to terminate his ----------- employment for Good Reason. For purposes of this Agreement, "Good Reason" shall mean, without the Executive's express written consent, any of the following: (i) The assignment to the Executive of any duties inconsistent with the Executive's status or position with the Company, or a substantial alteration in the nature or status of the Executive's responsibilities from those in effect immediately prior to the Change in Control; (ii) A reduction by the Company in the Executive's annual compensation including, but not limited to, base pay or short and/long term incentive pay in effect immediately prior to a Change in Control; (iii) The relocation of the Company's principal executive offices to a location more than fifty miles from Minnetonka, Minnesota; (B) the Company requiring the Executive to be based anywhere other than at his offices in Grand Rapids, Michigan or Naples, Florida, except for required travel on the Company's business to an extent substantially consistent with the Executive's business travel obligations immediately prior to the Change in Control, provided, however, that the Executive shall not be required to travel to the Company's principal executive offices more than twice a month; or (C) a significant increase in the level of travel required of the Executive as compared to travel obligations immediately prior to the Change in Control; (iv) The failure by the Company to continue to provide the Executive with benefits at least as favorable to those enjoyed by the Executive under any of the 4 Company's pension, life insurance, medical, health and accident, disability, deferred compensation, incentive awards, incentive stock options, or savings plans in which the Executive was participating immediately prior to the Change in Control, the taking of any action by the Company which would directly or indirectly materially reduce any of such benefits or deprive the Executive of any material fringe benefit enjoyed immediately prior to the Change in Control, or the failure by the Company to provide the Executive with the number of paid vacation days to which the Executive is entitled immediately prior to the Change in Control, provided, however, that the Company may amend any such plan or programs as long as such amendments do not reduce any benefits to which the Executive would be entitled upon termination; (v) The failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement, as contemplated in Section 7; or (vi) Any material violation of this Agreement by the Company. Notwithstanding the foregoing, for a period of 180 days beginning 30 days after an event constituting a Change in Control, Executive may terminate his employment for any reason or no reason, and such termination shall be deemed to be Good Reason and entitle Executive to the benefits provided in Section 4(d) herein. (d) Notice of Termination. Any purported termination of the --------------------- Executive's employment by the Company or by the Executive shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 8. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth the facts and circum stances claimed to provide a basis for termination of the Executive's employment. (e) Date of Termination. For purposes of this Agreement, "Date of ------------------- Termination" shall mean: (i) If the Executive's employment is terminated for Disability, 30 days after Notice of Termination is given (provided that the Executive shall have been absent from full-time performance of duties for at least six (6) months and shall not have returned to the full- time performance of the Executive's duties during such 30 day period in accordance with Section 3(a) hereof); and (ii) If the Executive's employment is terminated pursuant to subsections (b) or (c) above or for any other reason (other than Disability), the date specified in the Notice of Termination (which, in the case of a termination pursuant to subsection (b) above shall not be less than 10 days, and in the case of a termination pursuant to 5 subsection (c) above shall not be less than 10 nor more than 30 days, respectively, from the date such Notice of Termination is given). (f) Dispute of Termination. If, within 10 days after any Notice of ---------------------- Termination is given, the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be the date on which the dispute is finally determined, either by mutual written agreement of the parties, or by a final judgment, order or decree of a court of competent jurisdiction (which is not appealable or the time for appeal therefrom having expired and no appeal having been perfected); provided, that the Date of Termination shall be extended by a notice of dispute only if such notice is given in good faith and the party giving such notice pursues the resolution of such dispute with reasonable diligence. Notwithstanding the pendency of any such dispute, the Company shall continue to pay the Executive full compensation in effect when the notice giving rise to the dispute was given (including, but not limited to, base salary) and continue the Executive as a participant in all compensation, benefit and insurance plans in which the Executive was participating when the notice giving rise to the dispute was given, until the dispute is finally resolved in accordance with this subsection. Amounts paid under this subsection are in addition to all other amounts due under this Agreement and shall not be offset against or reduce any other amounts under this Agreement. 4. Compensation Upon Termination or During Disability. Following a -------------------------------------------------- Change in Control of the Company, as defined in subsection 2(a), upon termination of the Executive's employment or during a period of Disability, the Executive shall be entitled to the following benefits: (a) During any period that the Executive fails to perform full-time duties with the Company as a result of a Disability, the Company shall pay the Executive, the Executive's base salary as in effect at the commencement of any such period and the amount of any other form or type of compensation otherwise payable for such period if the Executive were not so disabled, until such time as the Executive is determined to be eligible for long term disability benefits in accordance with the Company's insurance programs then in effect or the Executive is terminated for Disability. (b) If the Executive's employment shall be terminated by the Company for Cause or by the Executive other than for Good Reason or Disability, the Company shall pay to the Executive his full base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given and the Company shall have no further obligation to the Executive under this Agreement, except with respect to any benefits to which the Executive is entitled under any Company pension or welfare benefit plan, insurance program or as otherwise required by law. (c) If the Executive's employment shall be terminated by the Company or by the Executive for Disability, or by reason of death, the Company shall immediately commence 6 payment to the Executive (or the Executive's designated beneficiaries or estate, if no beneficiary is designated) of any and all benefits to which the Executive is entitled under the Company's retirement and insurance programs then in effect. (d) If the Executive's employment shall be terminated (A) by the Company other than for Cause, Disability or the Executive's death or (B) by the Executive for Good Reason, then the Executive shall be entitled to the benefits provided below: (i) The Company shall pay the Executive, through the Date of Termination, the Executive's base salary as in effect at the time the Notice of Termination is given and any other form or type of compensation otherwise payable for such period; (ii) In lieu of any further salary payments for periods subsequent to the Date of Termination, the Company shall pay a severance payment (the "Severance Payment") equal to two times the Executive's Annual Compensation as defined below. For purposes of this Section 4, "Annual Compensation" shall mean the Executive's annual salary (regardless of whether all or any portion of such salary has been contributed to a deferred compensation plan), the annual amount of the Company bonus for which the Executive is eligible upon attainment of 100% of the target (regardless of whether such target bonus has been achieved or whether conditions of such target bonus are actually fulfilled), the amount contributed on behalf of the Executive by the Company as a profit sharing contribution to the Company's qualified retirement plan for the plan year ended immediately prior to the Change in Control, and any other type or form of compensation paid to the Executive by the Company (or any corporation (an "Affiliate") affiliated with the Company within the meaning of Section 1504 of the Internal Revenue Code of 1986 as it may be amended from time to time (the "Code")) and included in the Executive's gross income for federal tax purposes during the 12-month period ending immediately prior to the Date of Termination, but excluding: a) any amount actually paid to the Executive as a cash payment of the target bonus (regardless of whether all or any portion of such the Company bonus was contributed to a deferred compensation plan); b) compensation income recognized as a result of the exercise of stock options or sale of the stock so acquired; and c) any payments actually or constructively received from a plan or arrangement of deferred compensation between the Company and the Executive. All of the items included in Annual Compensation shall be those in effect on the Date of Termination and shall be calculated without giving effect to any reduction in such compensation which would constitute a breach of this Agreement. The Severance Payment shall be made in a single lump sum within 60 days after the Date of Termination. (iii) For the 24-month period after the Date of Termination, the Company shall arrange to provide, at its sole expense, the Executive with life, disability, 7 accident and health insurance benefits substantially similar to those which the Executive is receiving or entitled to receive immediately prior to the Notice of Termination. The cost of providing such benefits shall be in addition to (and shall not reduce) the Severance Payment. Benefits otherwise receivable by the Executive pursuant to this paragraph (iii) shall be reduced by any comparable benefits actually received by the Executive from any subsequent employment during such period, and any such benefits actually received by the Executive shall be reported to the Company. (iv) Up to $10,000 for individual outplacement counseling to the Executive. (v) The Company shall also pay to the Executive all legal fees and expenses incurred by the Executive as a result of such termination (including all such fees and expenses, if any, incurred in contesting or disputing any such termination or in seeking to obtain or enforce any right or benefit provided by this Agreement). (e) The Executive shall not be required to mitigate the amount of any payment provided for in this Section 4 by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Section 4 be reduced by any compensation earned by the Executive as the result of employment by another employer or by retirement benefits after the Date of Termination, or otherwise. (f) The Executive shall be entitled to receive all benefits payable to the Executive under Company pension and welfare benefit plans or any successor of such plan and any other plan or agreement relating to retirement benefits which shall be in addition to, and not reduced by, any other amounts payable to the Executive under this Section 4. (g) The Executive shall be entitled to exercise all rights and to receive all benefits accruing to the Executive under any and all Company stock purchase and stock option plans or programs, or any successor to any such plans or programs, which shall be in addition to, and not reduced by, any other amounts payable to the Executive under this Section 4. Notwithstanding anything herein to the contrary, if the Executive's employment is governed by a separate written employment agreement (other than a stock option agreement) that provides benefits upon a termination of employment, the aggregate of any payments or benefits payable under such employment agreement shall offset and reduce the aggregate of payments and benefits under this Agreement. 5. Payment of Excise Tax.. Should any payments or benefits under the ---------------------- Agreement, individually or in the aggregate with other payments or benefits, be subject to excise tax pursuant to Section 4999 of the Internal Revenue Code of 1986, as may be amended, or any successor or 8 similar provision thereto, or comparable state or local tax laws, the Company shall pay to Executive such additional compensation as is necessary (after taking into account all federal, state and local income taxes payable by Executive as a result of the receipt of such compensation) to place Executive in the same after-tax position he would have been in had no such excise tax (or any interest or penalties thereon) been paid or incurred with respect to such payments or benefits. The Company shall pay such additional compensation upon the earlier of: (i) the time at which the Company withholds such excise tax from any payments to Executive; or (ii) 30 days after Executive notifies the Company that Executive has paid such excise tax pursuant to a tax return filed by Executive which takes the position that such excise tax is due and payable in reliance on a written opinion of Executive's tax counsel that it is more likely than not that such excise tax is due and payable, or, if later, the date the IRS notifies Executive that such amount is due and payable. Without limiting the obligation of the Company hereunder, Executive agrees, in the event Executive makes any payment pursuant to the preceding sentence, to negotiate with the Company in good faith with respect to procedures reasonably requested by the Company which would afford the Company the ability to contest the imposition of such excise tax; provided, however, that Executive will not be required to afford the Company any right to contest the applicability of any such excise tax to the extent that Executive reasonably determines that such contest is inconsistent with the overall tax interests of Executive. The Company agrees to hold in confidence and not to disclose, without Executive's prior written consent, any information with regard to Executive's tax position which the Company obtains pursuant to this subsection. 6. Funding of Payments. In order to assure the performance of the ------------------- Company or its successor of its obligations under this Agreement, the Company may deposit in trust an amount equal to the maximum payment that will be due the Executive under the terms hereof. Under a written trust instrument, the Trustee shall be instructed to pay to the Executive (or the Executive's legal representative, as the case may be) the amount to which the Executive shall be entitled under the terms hereof, and the balance, if any, of the trust not so paid or reserved for payment shall be repaid to the Company. If the Company deposits funds in trust, payment shall be made no later than the occurrence of a Change in Control. If and to the extent there are not amounts in trust sufficient to pay the Executive under this Agreement, the Company shall remain liable for any and all payments due to the Executive. In accordance with the terms of such trust, at all times during the term of this Agreement, the Executive shall have no rights, other than as an unsecured general creditor of the Company, to any amounts held in trust and all trust assets shall be general assets of the Company and subject to the claims of creditors of the Company. Failure of the Company to establish or fully fund such trust shall not be deemed a revocation or termination of this Agreement by the Company. 7. Successors; Binding Agreement. ----------------------------- (a) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to 51% or more of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of 9 the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to the compensation and benefits from the Company in the same amount and on the same terms as he would be entitled hereunder if he terminated his employment for Good Reason following a Change in Control, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. (b) This Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, successors, heirs, and designated beneficiaries. If the Executive should die while any amount would still be payable to the Executive hereunder if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive's designated beneficiaries, or, if there is no such designated beneficiary, to the Executive's estate. 8. Notice. For the purpose of this Agreement, notices and all other ------ communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed to the last known residence address of the Executive or in the case of the Company, to its principal office to the attention of each of the then directors of the Company with a copy to its Secretary, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. 9. Miscellaneous. No provision of this Agreement may be modified, waived ------------- or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the parties. No waiver by either party hereto at any time of any breach by the other party to this Agreement of, or compliance with, any condition or provision of this Agreement to be performed by such other-party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or similar time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Minnesota. 10. Validity. The invalidity or unenforceability or any provision of this -------- Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 10 IN WITNESS WHEREOF, the undersigned officer, on behalf of PremiumWear, Inc., and the Executive have hereunto set their hands to be effective as of the date first above written. PREMIUMWEAR, INC. By /s/ James S. Bury ------------------------------------------------ Its Chief Financial Officer --------------------------------------------- EXECUTIVE: /s/ Thomas D. Gleason -------------------------------------------------- 11 EX-99.3 3 0003.txt AMENDED AND RESTATED CHANGE IN CONTROL-D. BERG EXHIBIT 99.3 AMENDED AND RESTATED CHANGE IN CONTROL SEVERANCE AGREEMENT THIS AGREEMENT, amending and restating that Agreement dated as of September 30, 1999, is made and entered into by and between PremiumWear, Inc., a Delaware corporation with its principal offices at 5500 Feltl Road, Minnetonka, Minnesota (the "Company") and David E. Berg, residing at 4905 Poppy Lane, Edina, Minnesota 55435 (the "Executive"), and shall be effective as of this 22/nd/ day of May, 2000. WHEREAS, the Company considers the establishment and maintenance of a sound and vital management to be essential to protecting and enhancing the best interests of the Company and its shareholders; and WHEREAS, the Executive has made and is expected to make, due to the Executive's intimate knowledge of the business and affairs of the Company, its policies, methods, personnel, and problems, a significant contribution to the profitability, growth, and financial strength of the Company; and WHEREAS, the Company, as a publicly held corporation, recognizes that the possibility of a Change in Control may exist, and that such possibility and the uncertainty and questions which it may raise among management may result in the departure or distraction of the Executive in the performance of the Executive's duties, to the detriment of the Company and its shareholders; and WHEREAS, it is in the best interests of the Company and its stockholders to reinforce and encourage the continued attention and dedication of management personnel, including the Executive, to their assigned duties without distraction and to ensure the continued availability to the Company of the Executive in the event of a Change in Control. THEREFORE, in consideration of the foregoing and other respective covenants and agreements of the parties herein contained, the parties hereto agree as follows: 1. Term of Agreement. This Agreement shall be effective from and after ----------------- the date hereof and shall continue in effect through December 31, 2001, and shall automatically be extended for successive one-year periods thereafter unless the Board of Directors of the Company (the "Board") shall have approved, and the Executive is notified in writing, prior to January 1, 2001 and each January 1 thereafter, that the term of this Agreement shall not be extended or further extended; provided, however, that if a Change in Control shall have occurred during the original or extended term of this Agreement, this Agreement shall continue in effect for a period of 24 months from the date of the occurrence of a Change in Control. In the event that more than one Change in Control shall occur during the original or any extended term of this Agreement, the 24- month period shall follow the last Change in Control. This Agreement shall neither impose nor confer any further rights or obligations on the Company or the Executive on the day after the end of the term of this Agreement. Expiration of the term of this Agreement of itself and without subsequent action by the Company or the Executive shall not end the employment relationship between the Company and the Executive. Notwithstanding the foregoing, unless otherwise agreed to in writing by the Company, this Agreement shall terminate, be of no further force and effect, and no benefits shall be payable hereunder if, in connection with a Change in Control, Executive enters into a separate written agreement with the Company, or the successor as provided in Section 7 herein, effective upon a Change in Control, that provides compensation and benefits under terms and conditions comparable, in the aggregate, to the compensation and benefits and terms and conditions provided under this Agreement. 2. Change in Control. No benefits shall be payable hereunder unless ----------------- there shall have been a Change in Control. For purposes of this Agreement, a "Change in Control" of the Company shall mean a change in control which would be required to be reported in response to Item 6(e) on Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), whether or not the Company is then subject to such reporting requirement, including, without limitation, if: (a) Any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company, becomes a "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company's then outstanding securities; or (b) During any period of two consecutive years (not including any period ending prior to the effective date of this Agreement), the Incumbent Directors cease for any reason to constitute at least a majority of the Board of Directors. The term "Incumbent Directors" shall mean those individuals who are members of the Board of Directors on the effective date of this Agreement and any individual who subsequently becomes a member of the Board of Directors (other than a director designated by a person who has entered into agreement with the Company to effect a transaction contemplated by Section 2(c)) whose election or nomination for election by the Company's shareholders was approved by a vote of at least a majority of the then Incumbent Directors; or (c) (i) The Company consummates a merger, consolidation, share exchange, division or other reorganization of the Company with any corporation or entity, other than an entity owned at least 80% by the Company, unless immediately after such transaction, the shareholders of the Company immediately prior to such transaction beneficially own, directly or indirectly 51% or more of the combined voting power of resulting entity's outstanding voting securities as well as 51% or more of the Total Market Value of the resulting entity, or in the case of a division, 51% or more of the combined voting power of the outstanding voting securities of each entity resulting from the division as well as 51% or more of the Total Market Value of each such entity, in each case in substantially the same proportion as such shareholders owned shares of the Company prior to such transaction; (ii) the shareholders of the Company approve an agreement for the sale or disposition (in one transaction or a series of transactions) of assets of the Company, the total consideration of 2 which is greater than 51% of the Total Market Value of the Company, or (iii) the Company adopts a plan of complete liquidation or winding-up of the Company. "Total Market Value" shall mean the aggregate market value of the Company's or the resulting entity's outstanding common stock (on a fully diluted basis) plus the aggregate market value of the Company's or the resulting entity's other outstanding equity securities as measured by the exchange rate of the transaction or by such other method as the Board determines where there is not readily ascertainable exchange rate. 3. Termination Following Change in Control. If a Change in Control shall --------------------------------------- have occurred during the term of this Agreement, the Executive shall be entitled to the benefits provided in subsection 4(d) unless such termination is (A) because of the Executive's death or Retirement, (B) by the Company for Cause or Disability, or (C) by the Executive other than for Good Reason. (a) Disability; Retirement. If, as a result of incapacity due to ---------------------- physical or mental illness, the Executive shall have been absent from the full-time performance of the Executive's duties with the Company for at least six (6) consecutive months, and within 30 days after written Notice of Termination is given the Executive shall not have returned to the full- time performance of the Executive's duties, the Company may terminate the Executive's employment for "Disability". Any question as to the existence of the Executive's Disability upon which the Executive and the Company cannot agree shall be determined by a qualified independent physician selected by the Executive (or, if the Executive is unable to make such selection, it shall be made by any adult member of the Executive's immediate family), and approved by the Company. The determination of such physician made in writing to the Company and to the Executive shall be final and conclusive for all purposes of this Agreement. Termination by the Company or the Executive of the Executive's employment based on "Retirement" shall mean termination on or after attaining Normal Retirement Age in accordance with the PremiumWear, Inc. Profit Sharing Plan and Trust. (b) Cause. For purposes of this Agreement, "Cause" shall mean: ----- (i) the willful and continued failure by the Executive (other than any such failure resulting from (1) the Executive's incapacity due to physical or mental illness, (2) any such actual or anticipated failure after the issuance of a Notice of Termination by the Executive for Good Reason or (3) the Company's active or passive obstruction of the performance of the Executive's duties and responsibilities) to perform substantially the duties and responsibilities of the Executive's position with the Company after a written demand for substantial performance is delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed the duties or responsibilities; (ii) the conviction of the Executive by a court of competent jurisdiction for felony criminal conduct; or 3 (iii) the willful engaging by the Executive in fraud or dishonesty which is demonstrably and materially injurious to the Company, monetarily or otherwise. No act, or failure to act, on the Executive's part shall be deemed "willful" unless committed, or omitted by the Executive in bad faith and without reasonable belief that the Executive's act or failure to act was in the best interest of the Company. The Executive shall not be terminated for Cause unless and until the Company shall have delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive's counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive's conduct was Cause and specifying the particulars thereof in detail. (c) Good Reason. The Executive shall be entitled to terminate his ----------- employment for Good Reason. For purposes of this Agreement, "Good Reason" shall mean, without the Executive's express written consent, any of the following: (i) The assignment to the Executive of any duties inconsistent with the Executive's status or position with the Company, or a substantial alteration in the nature or status of the Executive's responsibilities from those in effect immediately prior to the Change in Control; (ii) A reduction by the Company in the Executive's annual compensation including, but not limited to, base pay or short and/long term incentive pay in effect immediately prior to a Change in Control; (iii) (A) The relocation of the Company's principal executive offices to a location more than fifty miles from Minnetonka, Minnesota; (B) the Company requiring the Executive to be based anywhere other than the Company's principal executive offices except for required travel on the Company's business to an extent substantially consistent with the Executive's business travel obligations immediately prior to the Change in Control; or (C) a significant increase in the level of travel required of the Executive as compared to travel obligations immediately prior to the Change in Control; (iv) The failure by the Company to continue to provide the Executive with benefits at least as favorable to those enjoyed by the Executive under any of the Company's pension, life insurance, medical, health and accident, disability, deferred compensation, incentive awards, incentive stock options, or savings plans in which the Executive was participating immediately prior to the Change in Control, the taking of any action by the Company which would directly or indirectly materially reduce any of such benefits or deprive the Executive of any material fringe benefit 4 enjoyed immediately prior to the Change in Control, or the failure by the Company to provide the Executive with the number of paid vacation days to which the Executive is entitled immediately prior to the Change in Control, provided, however, that the Company may amend any such plan or programs as long as such amendments do not reduce any benefits to which the Executive would be entitled upon termination; (v) The failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement, as contemplated in Section 7; or (vi) any material violation of this Agreement by the Company. (d) Notice of Termination. Any purported termination of the --------------------- Executive's employment by the Company or by the Executive shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 8. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth the facts and circum stances claimed to provide a basis for termination of the Executive's employment. (e) Date of Termination. For purposes of this Agreement, "Date of ------------------- Termination" shall mean: (i) If the Executive's employment is terminated for Disability, 30 days after Notice of Termination is given (provided that the Executive shall have been absent from full-time performance of duties for at least six (6) months and shall not have returned to the full- time performance of the Executive's duties during such 30 day period in accordance with Section 3(a) hereof); and (ii) If the Executive's employment is terminated pursuant to subsections (b) or (c) above or for any other reason (other than Disability), the date specified in the Notice of Termination (which, in the case of a termination pursuant to subsection (b) above shall not be less than 10 days, and in the case of a termination pursuant to subsection (c) above shall not be less than 10 nor more than 30 days, respectively, from the date such Notice of Termination is given). (f) Dispute of Termination. If, within 10 days after any Notice of ---------------------- Termination is given, the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be the date on which the dispute is finally determined, either by mutual written agreement of the parties, or by a final judgment, order or decree of a court of competent jurisdiction (which is not appealable or the time for appeal therefrom having expired and no appeal having been perfected); provided, that the Date of Termination shall be extended by a notice of dispute only if such notice is 5 given in good faith and the party giving such notice pursues the resolution of such dispute with reasonable diligence. Notwithstanding the pendency of any such dispute, the Company shall continue to pay the Executive full compensation in effect when the notice giving rise to the dispute was given (including, but not limited to, base salary) and continue the Executive as a participant in all compensation, benefit and insurance plans in which the Executive was participating when the notice giving rise to the dispute was given, until the dispute is finally resolved in accordance with this subsection. Amounts paid under this subsection are in addition to all other amounts due under this Agreement and shall not be offset against or reduce any other amounts under this Agreement. 4. Compensation Upon Termination or During Disability. Following a -------------------------------------------------- Change in Control of the Company, as defined in subsection 2(a), upon termination of the Executive's employment or during a period of Disability, the Executive shall be entitled to the following benefits: (a) During any period that the Executive fails to perform full-time duties with the Company as a result of a Disability, the Company shall pay the Executive, the Executive's base salary as in effect at the commencement of any such period and the amount of any other form or type of compensation otherwise payable for such period if the Executive were not so disabled, until such time as the Executive is determined to be eligible for long term disability benefits in accordance with the Company's insurance programs then in effect or the Executive is terminated for Disability. (b) If the Executive's employment shall be terminated by the Company for Cause or by the Executive other than for Good Reason, Disability or Retirement, the Company shall pay to the Executive his full base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given and the Company shall have no further obligation to the Executive under this Agreement, except with respect to any benefits to which the Executive is entitled under any Company pension or welfare benefit plan, insurance program or as otherwise required by law. (c) If the Executive's employment shall be terminated by the Company or by the Executive for Disability or Retirement, or by reason of death, the Company shall immediately commence payment to the Executive (or the Executive's designated beneficiaries or estate, if no beneficiary is designated) of any and all benefits to which the Executive is entitled under the Company's retirement and insurance programs then in effect. (d) If the Executive's employment shall be terminated (A) by the Company other than for Cause, Retirement, Disability or the Executive's death or (B) by the Executive for Good Reason, then the Executive shall be entitled to the benefits provided below: (i) The Company shall pay the Executive, through the Date of Termination, the Executive's base salary as in effect at the time the Notice of 6 Termination is given and any other form or type of compensation otherwise payable for such period; (ii) In lieu of any further salary payments for periods subsequent to the Date of Termination, the Company shall pay a severance payment (the "Severance Payment") equal to two times the Executive's Annual Compensation as defined below. For purposes of this Section 4, "Annual Compensation" shall mean the Executive's annual salary (regardless of whether all or any portion of such salary has been contributed to a deferred compensation plan), the annual amount of the Company bonus for which the Executive is eligible upon attainment of 100% of the target (regardless of whether such target bonus has been achieved or whether conditions of such target bonus are actually fulfilled), and any other type or form of compensation paid to the Executive by the Company (or any corporation (an "Affiliate") affiliated with the Company within the meaning of Section 1504 of the Internal Revenue Code of 1986 as it may be amended from time to time (the "Code")) and included in the Executive's gross income for federal tax purposes during the 12-month period ending immediately prior to the Date of Termination, but excluding: a) any amount actually paid to the Executive as a cash payment of the target bonus (regardless of whether all or any portion of such the Company bonus was contributed to a deferred compensation plan); b) compensation income recognized as a result of the exercise of stock options or sale of the stock so acquired; and c) any payments actually or constructively received from a plan or arrangement of deferred compensation between the Company and the Executive. All of the items included in Annual Compensation shall be those in effect on the Date of Termination and shall be calculated without giving effect to any reduction in such compensation which would constitute a breach of this Agreement. The Severance Payment shall be made in a single lump sum within 60 days after the Date of Termination. (iii) For the 24-month period after the Date of Termination, the Company shall arrange to provide, at its sole expense, the Executive with life, disability, accident and health insurance benefits substantially similar to those which the Executive is receiving or entitled to receive immediately prior to the Notice of Termination. The cost of providing such benefits shall be in addition to (and shall not reduce) the Severance Payment. Benefits otherwise receivable by the Executive pursuant to this paragraph (iii) shall be reduced to the extent comparable benefits are actually received by the Executive during such period, and any such benefits actually received by the Executive shall be reported to the Company. (iv) Up to $10,000 for individual outplacement counseling to the Executive. (v) The Company shall also pay to the Executive all legal fees and expenses incurred by the Executive as a result of such termination (including all such 7 fees and expenses, if any, incurred in contesting or disputing any such termination or in seeking to obtain or enforce any right or benefit provided by this Agreement). (e) The Executive shall not be required to mitigate the amount of any payment provided for in this Section 4 by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Section 4 be reduced by any compensation earned by the Executive as the result of employment by another employer or by retirement benefits after the Date of Termination, or otherwise. (f) The Executive shall be entitled to receive all benefits payable to the Executive under Company pension and welfare benefit plans or any successor of such plan and any other plan or agreement relating to retirement benefits which shall be in addition to, and not reduced by, any other amounts payable to the Executive under this Section 4. (g) The Executive shall be entitled to exercise all rights and to receive all benefits accruing to the Executive under any and all Company stock purchase and stock option plans or programs, or any successor to any such plans or programs, which shall be in addition to, and not reduced by, any other amounts payable to the Executive under this Section 4. Notwithstanding anything herein to the contrary, if the Executive's employment is governed by a separate written employment agreement that provides benefits upon a termination of employment, the aggregate of any payments or benefits payable under such employment agreement shall offset and reduce the aggregate of payments and benefits under this Agreement. 5. Payment of Excise Tax. Should any payments or benefits under the --------------------- Agreement, individually or in the aggregate with other payments or benefits, be subject to excise tax pursuant to Section 4999 of the Internal Revenue Code of 1986, as may be amended, or any successor or similar provision thereto, or comparable state or local tax laws, the Company shall pay to Executive such additional compensation as is necessary (after taking into account all federal, state and local income taxes payable by Executive as a result of the receipt of such compensation) to place Executive in the same after-tax position he would have been in had no such excise tax (or any interest or penalties thereon) been paid or incurred with respect to such payments or benefits. The Company shall pay such additional compensation upon the earlier of: (i) the time at which the Company withholds such excise tax from any payments to Executive; or (ii) 30 days after Executive notifies the Company that Executive has paid such excise tax pursuant to a tax return filed by Executive which takes the position that such excise tax is due and payable in reliance on a written opinion of Executive's tax counsel that it is more likely than not that such excise tax is due and payable, or, if later, the date the IRS notifies Executive that such amount is due and payable. Without limiting the obligation of the Company hereunder, Executive agrees, in the event Executive makes any payment pursuant to the preceding sentence, to negotiate with the Company in good faith with respect to procedures reasonably requested by the Company which would afford the Company the ability to contest the imposition of such excise tax; provided, however, that Executive will not be 8 required to afford the Company any right to contest the applicability of any such excise tax to the extent that Executive reasonably determines that such contest is inconsistent with the overall tax interests of Executive. The Company agrees to hold in confidence and not to disclose, without Executive's prior written consent, any information with regard to Executive's tax position which the Company obtains pursuant to this subsection. 6. Funding of Payments. In order to assure the performance of the ------------------- Company or its successor of its obligations under this Agreement, the Company may deposit in trust an amount equal to the maximum payment that will be due the Executive under the terms hereof. Under a written trust instrument, the Trustee shall be instructed to pay to the Executive (or the Executive's legal representative, as the case may be) the amount to which the Executive shall be entitled under the terms hereof, and the balance, if any, of the trust not so paid or reserved for payment shall be repaid to the Company. If the Company deposits funds in trust, payment shall be made no later than the occurrence of a Change in Control. If and to the extent there are not amounts in trust sufficient to pay the Executive under this Agreement, the Company shall remain liable for any and all payments due to the Executive. In accordance with the terms of such trust, at all times during the term of this Agreement, the Executive shall have no rights, other than as an unsecured general creditor of the Company, to any amounts held in trust and all trust assets shall be general assets of the Company and subject to the claims of creditors of the Company. Failure of the Company to establish or fully fund such trust shall not be deemed a revocation or termination of this Agreement by the Company. 7. Successors; Binding Agreement. ----------------------------- (a) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to 51% or more of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to the compensation and benefits from the Company in the same amount and on the same terms as he would be entitled hereunder if he terminated his employment for Good Reason following a Change in Control, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. (b) This Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, successors, heirs, and designated beneficiaries. If the Executive should die while any amount would still be payable to the Executive hereunder if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive's designated beneficiaries, or, if there is no such designated beneficiary, to the Executive's estate. 9 8. Notice. For the purpose of this Agreement, notices and all other ------ communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed to the last known residence address of the Executive or in the case of the Company, to its principal office to the attention of each of the then directors of the Company with a copy to its Secretary, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. 9. Miscellaneous. No provision of this Agreement may be modified, waived ------------- or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the parties. No waiver by either party hereto at any time of any breach by the other party to this Agreement of, or compliance with, any condition or provision of this Agreement to be performed by such other-party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or similar time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Minnesota. 10. Validity. The invalidity or unenforceability or any provision of this -------- Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. IN WITNESS WHEREOF, the undersigned officer, on behalf of PremiumWear, Inc., and the Executive have hereunto set their hands as of the date first above written. PREMIUMWEAR, INC. By /s/ Thomas D. Gleason ----------------------------- Its Chairman of the Board EXECUTIVE: /s/ David E. Berg -------------------------------- 10 EX-99.4A 4 0004.txt EMPLOYMENT AGREEMENT DAVID BERG EXHIBIT 99.4(a) EMPLOYMENT AGREEMENT THIS AGREEMENT is made and entered into by and between PremiumWear, Inc., a Delaware corporation with its principal offices at 5500 Feltl Road, Minnetonka, Minnesota (the "Company"), and David E. Berg, residing at Edina, Minnesota (the "Executive"), and shall be effective as of this 26th day of May, 2000. WHEREAS, pursuant to an Agreement and Plan of Merger dated as of May 26, 2000 (the "Merger Agreement"), by and among New England Business Service, Inc., a Delaware corporation ("NEBS"), Penguin Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of NEBS ("Sub"), and the Company, Sub will offer to purchase shares of the Company's common stock pursuant to a tender offer, and upon successful completion of the tender offer, will thereafter be merged with and into the Company (the "Merger"), with the Company being the surviving corporation in the Merger and a wholly-owned subsidiary of NEBS; and WHEREAS, the Company desires to secure the continuation of the Executive's services as President and Chief Executive Officer following the Merger, and the Executive desires to perform such services for the Company, on the terms and conditions as set forth herein; NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements of the parties herein contained, the parties hereto agree as follows: 1. Term. This Agreement shall be effective from and after the date hereof ---- and shall continue in effect through June 30, 2003. Except as expressly provided herein, this Agreement shall neither impose nor confer any further rights or obligations on the Company or the Executive on the day after the end of the term of this Agreement. Expiration of the term of this Agreement of itself and without subsequent action by the Company or the Executive shall not end the employment relationship between the Company and the Executive. 2. Duties. The Executive is engaged to and shall render services in the ------ position of President and Chief Executive Officer of the Company. Following the Merger, the Executive will in addition be appointed as an executive officer of NEBS with the title of Senior Vice President. In this regard, the Executive shall perform such services as are appropriate to those positions and such other services that are assigned to him from time to time by the President of NEBS. The Executive will devote his full time, attention and skill to the business and affairs of the Company during normal working hours, and will use his best efforts to advance the Company's interests, and will not engage in outside business activities, except for managing passive investments and serving on other corporate, civic or charitable boards or committees, provided that such permitted outside business activities do not significantly interfere with the performance of his duties hereunder. 1 3. Compensation. ------------ (a) Base Salary. Commencing on the effective date of the Merger, and thereafter during the term of the Executive's employment hereunder, the Company will pay to the Executive an annual base salary of $225,000, such salary to be paid in conformity with the Company's policies relating to salaried employees. The Executive's base salary will be subject to annual review and may be increased, but not decreased, based on the recommendation of the President of NEBS. (b) Bonus. The Executive will be eligible for the following incentive bonuses following the Merger: (i) The Executive will participate in an Annual Executive Bonus Plan, beginning with NEBS' fiscal year 2001, with a bonus target equal to 60% of base salary. Payments will be determined against financial and personal objectives established by NEBS' Board of Directors and President at the beginning of each fiscal year, which objectives will include Company-specific objectives, as well as NEBS' overall corporate objectives; provided, however, that 50% of the Executive's bonus target for fiscal 2001 will be guaranteed, and all payments to the Executive under the Annual Executive Bonus Plan with respect to NEBS' fiscal years 2001 through 2003 will be paid in cash within 60 days following the end of the applicable fiscal year. The financial objectives established for the Annual Executive Bonus Plan for fiscal year 2001 that will be applicable to the Executive are set forth in Attachment A hereto. (ii) The Company will establish a Special Incentive Plan which will be in effect for NEBS' fiscal years 2001 through 2003, and the Executive will participate in this plan with an annual bonus target equal to 120% of base salary. Payments will be determined against specific sales and earnings objectives for the Company, which objectives are set forth in Attachment B hereto; provided, however, that upon the occurrence of a Change in Control (as defined below), 50% of the Executive's bonus target for the remaining fiscal years of the plan (including the year in which the Change in Control occurs) will be guaranteed; provided, further, however, that the foregoing guarantee will not apply with respect to any fiscal year in which the Executive's employment is terminated (A) by the Company for Cause (as hereinafter defined) or (B) by the Executive other than for Good Reason (as hereinafter defined), or for subsequent fiscal years. For purposes of this Agreement, "Change in Control" has the same meaning, and is subject to the same limitations, as set forth in Section 2 of the First Amendment to Amended and Restated Change in Control Severance Agreement dated as of May 26, 2000 by and between the Company and the Executive. Payments under the Special Incentive Plan will be made within 60 days following the end of the applicable fiscal year and will be in the form of restricted shares of NEBS common stock in lieu of cash, under NEBS' Stock Compensation Plan, and such shares will vest six months following the end of the applicable fiscal year with respect to each respective award. Restricted share awards will be subject to 2 the terms and conditions of restricted stock award agreements substantially in the form of Attachment C hereto. With respect to each award, if the aggregate fair market value of the awarded shares on the vesting date is less than the fair market value of such shares on the date of grant, then the Company will pay such difference to the Executive in cash within 10 days of the applicable vesting date. (iii) Upon the effective date of the Merger, the Executive's participation in the Company's 2000 Bonus Plan (the "2000 Bonus Plan") will cease; provided, however, that, within 60 days following the Merger, the Company will pay the Executive the pro-rated amount of the bonus for which the Executive was otherwise eligible under the 2000 Bonus Plan (assuming for these purposes that the plan permits pro-rated payouts) with respect to the period from January 2, 2000 through the effective date of the Merger. 4. Additional Benefits. ------------------- (a) Stock Options. (i) Immediately following the Merger, the Executive will be granted an option to purchase 25,000 shares of NEBS common stock. The portion of the option that vests on the date of grant will, to the extent permitted by applicable law, be granted in the form of incentive stock options, and such portion as qualifies for incentive stock option status will be granted under the NEBS 1997 Key Employee and Eligible Director Stock Option and Stock Appreciation Rights Plan (the "1997 Plan"); the remaining portion of the option will be granted on terms substantially similar to the 1997 Plan and will be in the form of options that do not qualify as incentive stock options. The exercise price for such option will be the fair market value of NEBS common stock on the date of grant, as determined in accordance with the 1997 Plan. The option will vest as to 25% of the option shares on the date of grant, and as to an additional 25% per year on each of the first three anniversaries of the date of grant, and will have a maximum term of ten years, subject to earlier termination in accordance with the terms of the 1997 Plan. (ii) The Executive will be entitled to receive additional option grants during NEBS' fiscal 2001 equal to the difference, if any, between the number of options granted to the Executive immediately following the Merger as described above and such greater number of options granted during fiscal year 2001 to other NEBS senior vice presidents with comparable duties and responsibilities. (b) Other Benefits. (i) The Executive will be entitled to and will receive such other employee benefits, such as 401(k), hospitalization, medical, life and other insurance benefits, vacation, sick pay and short-term and long-term disability that are now being maintained by the Company for the benefit of senior executives, subject to the terms, conditions, and overall administration of such benefits and to the right of the Company to hereafter change the level of such benefits as part of a general change in 3 policy affecting senior executives of the Company generally; provided that any action by the Company which would directly or indirectly materially reduce any of such benefits and which remains uncured after 30 days following the delivery of the Executive's written notice of such breach to the Company in accordance with Section 9 below will entitle the Executive to terminate his employment hereunder for Good Reason (as defined below); and provided, further, that so long as the Company does not reduce its portion (in either dollars or percentage of total premium cost) of the Executive's premium cost for the group health plans in which the Executive participates, any increase in the Executive's co-payment amount for such premiums shall not be deemed to be a reduction in the Executive's benefits provided by this Section. (ii) The Company will promptly pay (or reimburse the Executive for) all reasonable business expenses incurred by him in the performance of his duties hereunder in accordance with policies from time to time adopted by the Board of Directors or by NEBS, including business travel and entertainment expenses. The Executive shall furnish to the Company such receipts and records as the Company may require to verify the foregoing expenses. (iii) As an executive officer of NEBS following the Merger, the Executive will be eligible to participate in the financial, estate and tax planning assistance program made available to NEBS' officers. The Company will reimburse the Executive up to $4,000 per fiscal year for expenses incurred in these services. Following the Merger, the Executive will be invited to attend meetings of NEBS' Board of Directors to the same extent as other executive officers of NEBS. 5. Termination of Employment. ------------------------- (a) Termination by the Company. The Company may terminate the Executive's employment with the Company hereunder at any time: (i) upon the death or Disability (as hereinafter defined) of the Executive. For purposes of this Agreement, "Disability" shall be deemed the reason for the Company's termination of the Executive's employment with the Company if, as a result of the Executive's incapacity due to mental or physical disability, the Executive is absent from the full-time performance of his duties with the Company for at least 6 consecutive months, and within 30 days after written Notice of Termination (as defined below) is given the Executive shall not have returned to the full-time performance of his duties. Any question as to the existence of the Executive's Disability upon which the Executive and the Company cannot agree shall be determined by a qualified independent physician selected by the Executive (or, if the Executive is unable to make such selection, it shall be made by any adult member of the Executive's immediate family), and reasonably approved by the Company. The determination of such physician made in writing to the Company and to the Executive shall be final and conclusive for all purposes of this Agreement, absent fraud. 4 (ii) for Cause. For purpose of this Agreement, "Cause" shall mean (A) the willful and continued failure by the Executive (other than any such failure resulting from (1) the Executive's incapacity due to physical or mental illness or death, (2) any such actual or anticipated failure after the issuance of a Notice of Termination by the Executive for Good Reason, or (3) the Company's active or passive obstruction of the performance of the Executive's duties and responsibilities) to perform substantially the duties and responsibilities of the Executive's position with the Company after a written demand for substantial performance, signed by a majority of the Company's Board of Directors, is delivered to the Executive, which demand specifically identifies the manner in which the directors believe that the Executive has not substantially performed his duties or responsibilities; (B) the conviction of the Executive by a court of competent jurisdiction for felony criminal conduct; (C) the willful engaging by the Executive in fraud or dishonesty which is demonstrably and materially injurious to the Company or its reputation, monetarily or otherwise; or (D) the Executive's violation of Section 7 of this Agreement (other than violations of Section 7(a) that are both inadvertent and immaterial). No act, or failure to act, on the Executive's part shall be deemed "willful" unless committed, or omitted by the Executive in bad faith and without a reasonable belief that the Executive's act or failure to act was in the best interest of the Company. The Executive shall not be terminated for Cause unless and until the Company shall have delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of NEBS' Board of Directors at a meeting of said Board called and held for such purpose (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive's counsel, to be heard by said Board), finding that, in the good faith opinion of said Board, the Executive's conduct was Cause and specifying the particulars thereof in detail. (iii) without Cause, provided that in such case the Executive shall be entitled to the benefits set forth in Section 6(d) and (e) below. (b) Termination by the Executive. The Executive may terminate his employment with the Company hereunder at any time: (i) for Good Reason. "Good Reason" shall mean, without the Executive's express written consent, any of the following: (A) the assignment to the Executive of any duties inconsistent with the Executive's status or position with the Company, or a substantial alteration in the nature or status of the Executive's responsibilities from those in effect immediately prior to the Merger; (B) a reduction by the Company in the Executive's annual base salary or bonus targets; (C) (1) the relocation of the Company's principal executive offices to a location more than 50 miles from Minnetonka, Minnesota; or (2) the Company requiring the Executive to be based anywhere other than the Company's principal executive offices except for required travel on the Company's business to the extent reasonably consistent with the Company's strategic business plan, and except to the extent for travel in connection with the Executive's management reporting, planning and training responsibilities to NEBS; (D) the taking of any action by the Company which would directly or indirectly materially reduce any of the other benefits described in Section 4(b) and 5 which remains uncured after 30 days following the delivery of the Executive's written notice of such breach to the Company in accordance with Section 9 below; or (E) any material violation of this Agreement by the Company which remains uncured after 30 days following the delivery of the Executive's written notice of such breach to the Company in accordance with Section 9 below. The Executive acknowledges that he will not be entitled to terminate his employment with the Company for Good Reason solely by reason of (x) the consummation of the transactions contemplated by the Merger Agreement (and any subsequent transactions directly related thereto and contemplated thereby), including his resignation or removal from the board of directors of the Company or any of its subsidiaries, or any change in his reporting responsibilities to reflect the fact that the Company is a subsidiary of NEBS, or (y) any reduction or discontinuation of the Special Incentive Plan referred to in Section 3(b)(ii) after NEBS' fiscal year 2003, or (z) the Company's election not to extend the term of the Amended and Restated Change in Control Severance Agreement dated as of May 22, 2000, as amended (the "Change in Control Agreement"), by and between the Company and the Executive, in accordance with the first sentence of Section 1 of the Change in Control Agreement. (ii) other than for Good Reason; provided that the Company retains the right to terminate the Executive's employment for Cause at any time during the notice period referred to in Section 5(d) below. (c) Notice of Termination. Any purported termination of the Executive's employment by the Company or by the Executive shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 9 below. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth the facts and circumstances claimed to provide a basis for termination of the Executive's employment. (d) Date of Termination. For purposes of this Agreement, "Date of Termination" shall mean: (i) If the Executive's employment is terminated for Disability, 30 days after the Notice of Termination is given (provided that the Executive shall have been absent from the full-time performance of his duties for at least 6 months and shall not have returned to the full-time performance of his duties during such 30-day period in accordance with Section 5(a)(i) hereof); and (ii) If the Executive's employment is terminated pursuant to Section 5(a)(ii), 5(a)(iii) or 5(b) above or for any other reason (other than Disability), the date specified in the Notice of Termination (which, in the case of a termination pursuant to Section 5(a)(ii) above shall not be less than 10 days, and in the case of a termination pursuant to Section 5(b)(i) above shall not be less than 10 nor more than 30 days, and in the case of a termination pursuant to Section 5(b)(ii) above shall not be less than 60 days, respectively, from the date such Notice of Termination is given). 6 If the Executive delivers a Notice of Termination in connection with an intended termination of employment by the Executive other than for Good Reason, the Company may, in its sole discretion, waive the requirement that the Executive remain employed during the entire notice period, and may fix an earlier date as the Date of Termination, which actions shall not under any circumstances be deemed to be a termination of the Executive's employment by the Company without Cause. (e) Dispute of Termination. If, within 10 days after any Notice of Termination is given, the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be the date on which the dispute is finally determined, either by mutual written agreement of the parties, or by a final judgment, order or decree of a court of competent jurisdiction (which is not appealable or the time for appeal therefrom having expired and no appeal having been perfected); provided, that the Date of Termination shall be extended by a notice of dispute only if such notice is given in good faith and the party giving such notice pursues the resolution of such dispute with reasonable diligence. Notwithstanding the pendency of any such dispute, the Company shall continue to pay the Executive full compensation in effect when the notice giving rise to the dispute was given (including, but not limited to, base salary) and continue the Executive as a participant in all compensation, benefit and insurance plans in which the Executive was participating when the notice giving rise to the dispute was given, until the dispute is finally resolved in accordance with this Section. Amounts paid under this Section 5(e) are in addition to all other amounts due under this Agreement and shall not be offset against or reduce any other amounts under this Agreement. 6. Compensation Upon Termination or During Disability. Upon termination -------------------------------------------------- of the Executive's employment or during a period of Disability, the Executive shall be entitled to the following benefits: (a) During any period that the Executive fails to perform his full-time duties with the Company as a result of Disability, the Company shall pay the Executive his base salary as in effect at the commencement of any such period and the amount of any other form or type of compensation otherwise payable for such period if the Executive were not so disabled, until such time as the Executive is determined to be eligible for long term disability benefits in accordance with the Company's insurance program then in effect or the Executive is terminated for Disability. (b) If the Executive's employment shall be terminated by the Company for Cause or by the Executive other than for Good Reason, then the Company shall pay to the Executive his full base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given and the Company shall have no further obligation to the Executive under this Agreement, except with respect to any benefits to which the Executive is entitled under any Company pension or welfare plan, insurance program or as otherwise required by law. (c) If the Executive's employment shall be terminated by the Company for Disability or by reason of the Executive's death, then the Company shall (i) immediately 7 commence payment to the Executive (or the Executive's designated beneficiaries or estate, if no beneficiary is designated) of any and all benefits to which the Executive is entitled under the Company's retirement and insurance programs then in effect, (ii) immediately pay the Executive (or the executor or administrator of the Executive's estate) for all vacation time earned but not used through the Date of Termination and (iii) pay the Executive (or the executor or administrator of the Executive's estate) the bonus payment in accordance with Section 6(e) below. (d) If the Executive's employment shall be terminated (A) by the Company without Cause (excluding termination for Disability or by reason of the Executive's death), or (B) by the Executive for Good Reason, then notwithstanding such termination, the Executive shall be entitled to the benefits provided below: (i) The Company shall continue to pay the Executive his base salary at the rate in effect immediately prior to the Notice of Termination (or, if higher, at the rate in effect immediately prior to the reduction giving rise to the Executive's termination for Good Reason in accordance with Section 5(b)(i)(B) above) for the remaining term of this Agreement (the "Severance Period"). (ii) The Executive will be paid for all vacation time earned but not used through his Date of Termination, but vacation will not continue to accrue after such date. (iii) During the Severance Period, the Company shall also (A) continue to reimburse the Executive for the premium cost of any life or long term disability insurance maintained by the Executive pursuant to this Agreement on substantially the same terms as prior to the Notice of Termination, and (B) if the Executive is eligible for and elects continuation coverage under one or more group health plans sponsored by the Company, and is not otherwise eligible to receive such coverage pursuant to another employer's plan, pay the same portion of the premium cost of such coverage, if any, as is paid by the Company for members of its management team who are actively employed. Except as set forth above, after his Date of Termination the Executive's benefits under any other applicable employee benefit plans will be determined in accordance with the terms of such plans then in effect or as otherwise required by law. (iv) The amount of compensation and benefit payments to the Executive during the Severance Period shall be offset by any compensation or benefit payments by another employer, or by a self proprietorship if the Executive is self employed, to Employee during the Severance Period; provided that there shall be no offset with respect to any compensation or benefit payments derived from the continuation of any business activities in which the Executive was engaged prior to the Date of Termination and which are expressly permitted under Section 2 above. (e) If the Executive's employment shall be terminated (i) by the Company other than for Cause (including termination for Disability or by reason of the Executive's death), or (ii) by the Executive for Good Reason, prior to the end of any fiscal year, then 8 notwithstanding such termination or the terms of any bonus plan to the contrary, the Executive shall be entitled to a bonus if the earnings thresholds for the applicable fiscal year have been achieved as of the last day of the fiscal year in which his termination of employment occurs; provided, however, that the amount of such bonus shall be calculated by multiplying the bonus amount that would have been payable to the Executive, had his employment not terminated during the fiscal year, by a fraction, the numerator of which is the number of full weeks of employment completed by the Executive during such fiscal year and the denominator of which is 52. Notwithstanding the foregoing, if the Executive's employment shall be terminated (A) by the Company without Cause (excluding termination for Disability or by reason of the Employee's death), or (B) by the Executive for Good Reason, then notwithstanding such termination or the terms of any bonus plan to the contrary, the Executive shall be entitled to bonuses under the Special Incentive Plan referred to in Section 3(b)(ii) above with respect to each of the remaining fiscal years of the plan (including the year in which his termination of employment occurs) if the earnings thresholds for each applicable fiscal year have been achieved as of the last day of each such fiscal year; provided that each such bonus payment shall be in the amount that would have been payable to the Executive had his employment not been terminated; and provided, further, that if termination of the Executive's employment under the circumstances described above occurs upon or following a Change in Control, 50% of the Executive's bonus target under the Special Incentive Plan for such remaining years will be guaranteed. If the Executive's employment shall be terminated (A) by the Company for Cause, or (B) by the Executive other than for Good Reason, prior to the end of any fiscal year, then no bonus shall be payable for such year. Any bonus amount payable pursuant to this Section 6(e) shall be paid at the same time bonuses are paid to other senior executives of the Company, and shall be payable in cash. (f) The Company's obligation to make the payments provided by Section 6(d) or (e) is conditioned upon the Executive's execution of a customary release of claims relating to the termination of the Executive's employment with the Company, in favor of the Company, its affiliates, and their respective directors, officers, employees and agents. (g) If the Executive's employment shall be terminated (i) by the Company other than for Cause, or (ii) by the Executive for Good Reason, then (A) any unvested portion of the stock option referred to in Section 4(a)(i) shall automatically vest and become exercisable immediately prior to the Date of Termination, and (B) any unvested restricted shares of NEBS stock awarded in connection with the Special Incentive Plan and then held by the Executive shall thereupon vest in the Executive (or, in the case of death, in the person or persons to whom such shares pass by will or by the laws of descent and distribution), and shall be delivered to the Executive, or to the executor or administrator of his estate, upon satisfaction of all applicable income, employment and other tax withholding obligations. (h) All amounts payable to the Executive hereunder are subject to such income, employment and other tax withholding obligations as are required by applicable law. 9 (i) If the Executive's employment is terminated by the Company without Cause following the term of this Agreement, the Executive shall be entitled to severance benefits consistent with the Company's historical policy and practice with respect to corporate officers. 7. Non-Disclosure of Company Information; Non-Competition. ------------------------------------------------------ (a) The Executive understands that he will have access to confidential and proprietary information of the Company (including its subsidiaries and affiliates) and hereby agrees that he will treat all such information as confidential and proprietary information of the Company (or of such subsidiary or affiliate, as the case may be) and he will not, either directly or indirectly, copy, use or disclose any such confidential or proprietary information which he may either obtain or develop during employment with the Company to any person, firm, company, association or other entity, unless such copying, use or disclosure is for the exclusive benefit of the Company as the Company may direct or he is otherwise required to do so by law. (b) At such time as the Executive's employment with the Company terminates, regardless of the reason, the Executive shall return to the Company any and all confidential and proprietary information of the Company, customer files and all copies of such information, whether stored on paper or electronically, which the Executive may have acquired or developed during his employment with the Company and any other property of the Company, regardless of the confidential or proprietary nature of such property, which the Executive may have in his possession at that time. (c) During the term of this Agreement and while the Executive is employed by the Company, the Executive shall not, directly or indirectly, engage in any business or sales activity or other endeavor which competes with the business of the Company (or of any of its subsidiaries or affiliates), whether as an employee, agent, independent contractor, consultant, advisor, director, owner (except as a holder of not more than 1% of the outstanding stock of a publicly- traded company) or sole proprietor of another organization or entity. In addition, for a period of six months following the termination of the Executive's employment with the Company for Cause by the Company or for any reason by the Executive other than for Good Reason, the Executive shall not, directly or indirectly, anywhere within the United States, Canada and such other countries in which the Company conducts business during his employment, own (except as a holder of not more than 1% of the outstanding stock of a publicly- traded company), manage, operate, control, be employed by, render services to, participate in or be connected in any manner with any business which is competitive to the Company's business, including, without limitation, any business which buys, sells, manufactures, distributes, markets or promotes (i) apparel products to golf sports shops and to promotional products/advertising specialty industry customers or (ii) personalized apparel products targeted to small businesses for professional image, promotional or advertising specialty uses, it being recognized that (A) if the Executive's employment is terminated by the Company other than for Cause or by the Executive for Good Reason, the restrictions of this Section 7(c) shall 10 not apply after the termination of his employment, and (B) the restrictions of this Section 7(c) shall not apply with respect to any period during which the Company fails to continue making payments to the Executive at his base salary rate as set forth in Section 3(a) above. (d) For a period ending six months following termination of the Executive's employment with the Company, if the Executive's employment with the Company is terminated by the Company for Cause or by the Executive other than for Good Reason, then the Executive agrees that he will not, either directly or indirectly, solicit, hire, employ, retain or otherwise contact any employee of the Company, any independent contractor or sales representative of the Company or any person who has been an employee of the Company during the one-year period prior to the termination of the Executive's employment with the Company, nor assist any other person or entity to solicit or hire any such individual. (e) The Executive acknowledges that the restrictions set forth in this Section 7 are reasonably necessary to protect a legitimate business interest of the Company and that the Company has no adequate remedy at law for any breach of the provisions of this Section 7 by the Executive and that such breach will result in irreparable harm to the Company. Accordingly, in the event of the breach by the Executive of any of the provisions of this Section 7, the Company will have no further obligations to him under this Agreement, including without limitation the payments described in Section 6(d) and (e) above, and in addition and supplementary to any other rights and remedies existing in its favor, the Company shall be entitled to seek specific performance and/or injunctive or other relief in order to enforce or prevent any violation of the provisions hereof. 8. Successors; Binding Agreement. ----------------------------- (a) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to 51% or more of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to the compensation and benefits from the Company in the same amount and on the same terms as he would be entitled hereunder if he terminated his employment for Good Reason, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. (b) This Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, successors, heirs, and designated beneficiaries. If the Executive should die while any amount would still be payable to the Executive hereunder if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive's designated beneficiaries, or, if there is no such designated beneficiary, to the Executive's estate. 11 9. Notice. For the purposes of this Agreement, notices and all other ------ communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed to the last known residence address of the Executive or in the case of the Company, to its principal office to the attention of at least one of the directors of the Company, with a copy to NEBS, 500 Main Street, Groton, MA 01471, Attention: President (provided that notice to the Company shall not be effective unless a copy of such notice is delivered to NEBS as aforesaid), or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. 10. Miscellaneous. No provision of this Agreement may be modified, waived ------------- or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the parties. No waiver by either party hereto at any time of any breach by the other party to this Agreement of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or similar time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Minnesota. Each of the parties consents to personal jurisdiction in any action brought in any court, federal or state, of competent jurisdiction within the State of Minnesota, waives any argument that such a forum is not convenient, and agrees that any litigation or arbitration relating to this Agreement shall be venued in Hennepin County, Minnesota. If the Merger Agreement is terminated for any reason prior to the occurrence of the Merger, then this Agreement shall automatically be deemed to have been terminated and cancelled, without any further liability of either party or of NEBS to each other. 11. Severability. Any term or provision of this Agreement that is invalid ------------ or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. If the final judgment of a court of competent jurisdiction declares that any term or provision hereof is invalid or unenforceable, the parties agree that the court making the determination of invalidity or unenforceability shall have the power to reduce the scope, duration or area of the term or provision, to delete specific words or phrases or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified after the expiration of the time within which the judgment may be appealed. [Signature Page Follows] 12 IN WITNESS WHEREOF, the undersigned officer, on behalf of PremiumWear, Inc., and the Executive have hereunto set their hands as of the date first above written. PREMIUMWEAR, INC. By: /s/ Thomas D. Gleason ------------------------------------ Its Chairman of the Board EXECUTIVE: /s/ David E. Berg --------------------------------------- David E. Berg 13 EX-99.4B 5 0005.txt EMPLOYMENT AGREEMENT-CYNTHIA BOEDDEKER EXHIBIT 99.4(b) EMPLOYMENT AGREEMENT THIS AGREEMENT is made and entered into by and between PremiumWear, Inc., a Delaware corporation with its principal offices at 5500 Feltl Road, Minnetonka, Minnesota (the "Company"), and Cynthia L. Boeddeker, residing at Chanhassen, Minnesota (the "Executive"), and shall be effective as of this 26th day of May, 2000. WHEREAS, pursuant to an Agreement and Plan of Merger dated as of May 26, 2000 (the "Merger Agreement"), by and among New England Business Service, Inc., a Delaware corporation ("NEBS"), Penguin Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of NEBS ("Sub"), and the Company, Sub will offer to purchase shares of the Company's common stock pursuant to a tender offer, and upon successful completion of the tender offer, will thereafter be merged with and into the Company (the "Merger"), with the Company being the surviving corporation in the Merger and a wholly-owned subsidiary of NEBS; and WHEREAS, the Company desires to secure the continuation of the Executive's services as Vice President of Operations following the Merger, and the Executive desires to perform such services for the Company, on the terms and conditions as set forth herein; NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements of the parties herein contained, the parties hereto agree as follows: 1. Term. This Agreement shall be effective from and after the date hereof ---- and shall continue in effect through June 30, 2003. Except as expressly provided herein, this Agreement shall neither impose nor confer any further rights or obligations on the Company or the Executive on the day after the end of the term of this Agreement. Expiration of the term of this Agreement of itself and without subsequent action by the Company or the Executive shall not end the employment relationship between the Company and the Executive. 2. Duties. The Executive is engaged to and shall render services in the ------ position of Vice President of Operations of the Company. In this regard, the Executive shall perform such services as are appropriate to that position and such other services that are assigned to her from time to time by such person as the Board of Directors may designate from time to time (the "Designated Person"). The Executive will devote her full time, attention and skill to the business and affairs of the Company during normal working hours, and will use her best efforts to advance the Company's interests, and will not engage in outside business activities, except for managing passive investments and serving on other corporate, civic or charitable boards or committees, provided that such permitted outside business activities do not significantly interfere with the performance of her duties hereunder. 1 3. Compensation. ------------ (a) Base Salary. Commencing on the effective date of the Merger, and thereafter during the term of the Executive's employment hereunder, the Company will pay to the Executive an annual base salary of $150,000, such salary to be paid in conformity with the Company's policies relating to salaried employees. The Executive's base salary will be subject to annual review and may be increased, but not decreased, by the Company's Board of Directors, based on the recommendation of the Designated Person. (b) Bonus. The Executive will be eligible for the following incentive bonuses following the Merger: (i) The Executive will participate in an Annual Executive Bonus Plan, beginning with NEBS' fiscal year 2001, with a bonus target equal to 50% of base salary. Payments will be determined against financial and personal objectives established by NEBS' Board of Directors and the Designated Person at the beginning of each fiscal year, which objectives will include Company- specific objectives, as well as NEBS' overall corporate objectives; provided, however, that 50% of the Executive's bonus target for fiscal 2001 will be guaranteed, and all payments to the Executive under the Annual Executive Bonus Plan with respect to NEBS' fiscal years 2001 through 2003 will be paid in cash within 60 days following the end of the applicable fiscal year. The financial objectives established for the Annual Executive Bonus Plan for fiscal year 2001 that will be applicable to the Executive are set forth in Attachment A hereto. (ii) The Company will establish a Special Incentive Plan which will be in effect for NEBS' fiscal years 2001 through 2003, and the Executive will participate in this plan with an annual bonus target equal to $100,000. Payments will be determined against specific sales and earnings objectives for the Company, which objectives are set forth in Attachment B hereto; provided, however, that upon the occurrence of a Change in Control (as defined below), 50% of the Executive's bonus target for the remaining fiscal years of the plan (including the year in which the Change in Control occurs) will be guaranteed; provided, further, however, that the foregoing guarantee will not apply with respect to any fiscal year in which the Executive's employment is terminated (A) by the Company for Cause (as hereinafter defined) or (B) by the Executive other than for Good Reason (as hereinafter defined), or for subsequent fiscal years. For purposes of this Agreement, "Change in Control" has the same meaning, and is subject to the same limitations, as set forth in Section 2 of the First Amendment to Change in Control Severance Agreement dated as of May 26, 2000 by and between the Company and the Executive. Payments under the Special Incentive Plan will be made within 60 days following the end of the applicable fiscal year and will be in the form of restricted shares of NEBS common stock in lieu of cash, under NEBS' Stock Compensation Plan, and such shares will vest six months following the end of the applicable fiscal year with respect to each respective award. Restricted share awards will be subject to the terms and conditions of restricted stock award agreements substantially in the 2 form of Attachment C hereto. With respect to each award, if the aggregate fair market value of the awarded shares on the vesting date is less than the fair market value of such shares on the date of grant, then the Company will pay such difference to the Executive in cash within 10 days of the applicable vesting date. (iii) Upon the effective date of the Merger, the Executive's participation in the Company's 2000 Bonus Plan (the "2000 Bonus Plan") will cease; provided, however, that, within 60 days following the Merger, the Company will pay the Executive the pro-rated amount of the bonus for which the Executive was otherwise eligible under the 2000 Bonus Plan (assuming for these purposes that the plan permits pro-rated payouts) with respect to the period from January 2, 2000 through the effective date of the Merger. 4. Additional Benefits. ------------------- (a) Stock Options. Immediately following the Merger, the Executive will be granted an option to purchase 12,000 shares of NEBS common stock. The portion of the option that vests on the date of grant will, to the extent permitted by applicable law, be granted in the form of incentive stock options, and such portion as qualifies for incentive stock option status will be granted under the NEBS 1997 Key Employee and Eligible Director Stock Option and Stock Appreciation Rights Plan (the "1997 Plan"); the remaining portion of the option will be granted on terms substantially similar to the 1997 Plan and will be in the form of options that do not qualify as incentive stock options. The exercise price for such option will be the fair market value of NEBS common stock on the date of grant, as determined in accordance with the 1997 Plan. The option will vest as to 25% of the option shares on the date of grant, and as to an additional 25% per year on each of the first three anniversaries of the date of grant, and will have a maximum term of ten years, subject to earlier termination in accordance with the terms of the 1997 Plan. (b) Other Benefits. (i) The Executive will be entitled to and will receive such other employee benefits, such as 401(k), hospitalization, medical, life and other insurance benefits, vacation, sick pay and short-term and long-term disability that are now being maintained by the Company for the benefit of senior executives, subject to the terms, conditions, and overall administration of such benefits and to the right of the Company to hereafter change the level of such benefits as part of a general change in policy affecting senior executives of the Company generally; provided that any action by the Company which would directly or indirectly materially reduce any of such benefits and which remains uncured after 30 days following the delivery of the Executive's written notice of such breach to the Company in accordance with Section 9 below will entitle the Executive to terminate her employment hereunder for Good Reason (as defined below); and provided, further, that so long as the Company does not reduce its portion (in either dollars or percentage of total premium cost) of the Executive's premium cost for the group health plans in which the Executive participates, any increase in the Executive's co-payment amount for such premiums 3 shall not be deemed to be a reduction in the Executive's benefits provided by this Section. (ii) The Company will promptly pay (or reimburse the Executive for) all reasonable business expenses incurred by her in the performance of her duties hereunder in accordance with policies from time to time adopted by the Board of Directors or by NEBS, including business travel and entertainment expenses. The Executive shall furnish to the Company such receipts and records as the Company may require to verify the foregoing expenses. 5. Termination of Employment. ------------------------- (a) Termination by the Company. The Company may terminate the Executive's employment with the Company hereunder at any time: (i) upon the death or Disability (as hereinafter defined) of the Executive. For purposes of this Agreement, "Disability" shall be deemed the reason for the Company's termination of the Executive's employment with the Company if, as a result of the Executive's incapacity due to mental or physical disability, the Executive is absent from the full-time performance of her duties with the Company for at least 6 consecutive months, and within 30 days after written Notice of Termination (as defined below) is given the Executive shall not have returned to the full-time performance of her duties. Any question as to the existence of the Executive's Disability upon which the Executive and the Company cannot agree shall be determined by a qualified independent physician selected by the Executive (or, if the Executive is unable to make such selection, it shall be made by any adult member of the Executive's immediate family), and reasonably approved by the Company. The determination of such physician made in writing to the Company and to the Executive shall be final and conclusive for all purposes of this Agreement, absent fraud. (ii) for Cause. For purpose of this Agreement, "Cause" shall mean (A) the willful and continued failure by the Executive (other than any such failure resulting from (1) the Executive's incapacity due to physical or mental illness or death, (2) any such actual or anticipated failure after the issuance of a Notice of Termination by the Executive for Good Reason, or (3) the Company's active or passive obstruction of the performance of the Executive's duties and responsibilities) to perform substantially the duties and responsibilities of the Executive's position with the Company after a written demand for substantial performance, signed by a majority of the Company's Board of Directors, is delivered to the Executive, which demand specifically identifies the manner in which the directors believe that the Executive has not substantially performed her duties or responsibilities; (B) the conviction of the Executive by a court of competent jurisdiction for felony criminal conduct; (C) the willful engaging by the Executive in fraud or dishonesty which is demonstrably and materially injurious to the Company or its reputation, monetarily or otherwise; or (D) the Executive's violation of Section 7 of this Agreement (other than violations of Section 7(a) that are both inadvertent and immaterial). No act, or failure to act, on the Executive's part shall be deemed "willful" unless committed, or omitted by the 4 Executive in bad faith and without a reasonable belief that the Executive's act or failure to act was in the best interest of the Company. The Executive shall not be terminated for Cause unless and until the Company shall have delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of NEBS' Board of Directors at a meeting of said Board called and held for such purpose (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive's counsel, to be heard by said Board), finding that, in the good faith opinion of said Board, the Executive's conduct was Cause and specifying the particulars thereof in detail. (iii) without Cause, provided that in such case the Executive shall be entitled to the benefits set forth in Section 6(d) and (e) below. (b) Termination by the Executive. The Executive may terminate her employment with the Company hereunder at any time: (i) for Good Reason. "Good Reason" shall mean, without the Executive's express written consent, any of the following: (A) the assignment to the Executive of any duties inconsistent with the Executive's status or position with the Company, or a substantial alteration in the nature or status of the Executive's responsibilities from those in effect immediately prior to the Merger; (B) a reduction by the Company in the Executive's annual base salary or bonus targets; (C) (1) the relocation of the Company's principal executive offices to a location more than 50 miles from Minnetonka, Minnesota; or (2) the Company requiring the Executive to be based anywhere other than the Company's principal executive offices except for required travel on the Company's business to the extent reasonably consistent with the Company's strategic business plan, and except to the extent for travel in connection with the Executive's management reporting, planning and training responsibilities to NEBS; (D) the taking of any action by the Company which would directly or indirectly materially reduce any of the other benefits described in Section 4(b) and which remains uncured after 30 days following the delivery of the Executive's written notice of such breach to the Company in accordance with Section 9 below; or (E) any material violation of this Agreement by the Company which remains uncured after 30 days following the delivery of the Executive's written notice of such breach to the Company in accordance with Section 9 below. The Executive acknowledges that she will not be entitled to terminate her employment with the Company for Good Reason solely by reason of (x) the consummation of the transactions contemplated by the Merger Agreement (and any subsequent transactions directly related thereto and contemplated thereby), including her resignation or removal from the board of directors of the Company or any of its subsidiaries, or any change in her reporting responsibilities to reflect the fact that the Company is a subsidiary of NEBS, or (y) any reduction or discontinuation of the Special Incentive Plan referred to in Section 3(b)(ii) after NEBS' fiscal year 2003, or (z) the Company's election not to extend the term of the Change in Control Severance Agreement dated as of September 23, 1999, as amended (the "Change in Control Agreement"), by and between the Company and the Executive, in accordance with the first sentence of Section 1 of the Change in Control Agreement. 5 (ii) other than for Good Reason; provided that the Company retains the right to terminate the Executive's employment for Cause at any time during the notice period referred to in Section 5(d) below. (c) Notice of Termination. Any purported termination of the Executive's employment by the Company or by the Executive shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 9 below. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth the facts and circumstances claimed to provide a basis for termination of the Executive's employment. (d) Date of Termination. For purposes of this Agreement, "Date of Termination" shall mean: (i) If the Executive's employment is terminated for Disability, 30 days after the Notice of Termination is given (provided that the Executive shall have been absent from the full-time performance of her duties for at least 6 months and shall not have returned to the full-time performance of her duties during such 30-day period in accordance with Section 5(a)(i) hereof); and (ii) If the Executive's employment is terminated pursuant to Section 5(a)(ii), 5(a)(iii) or 5(b) above or for any other reason (other than Disability), the date specified in the Notice of Termination (which, in the case of a termination pursuant to Section 5(a)(ii) above shall not be less than 10 days, and in the case of a termination pursuant to Section 5(b)(i) above shall not be less than 10 nor more than 30 days, and in the case of a termination pursuant to Section 5(b)(ii) above shall not be less than 60 days, respectively, from the date such Notice of Termination is given). If the Executive delivers a Notice of Termination in connection with an intended termination of employment by the Executive other than for Good Reason, the Company may, in its sole discretion, waive the requirement that the Executive remain employed during the entire notice period, and may fix an earlier date as the Date of Termination, which actions shall not under any circumstances be deemed to be a termination of the Executive's employment by the Company without Cause. (e) Dispute of Termination. If, within 10 days after any Notice of Termination is given, the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be the date on which the dispute is finally determined, either by mutual written agreement of the parties, or by a final judgment, order or decree of a court of competent jurisdiction (which is not appealable or the time for appeal therefrom having expired and no appeal having been perfected); provided, that the Date of Termination shall be extended by a notice of dispute only if such notice is given in good faith and the party giving such notice pursues the resolution of such dispute with reasonable diligence. Notwithstanding the pendency of any such dispute, the Company shall continue to pay the Executive full compensation in effect when the notice giving rise to the dispute was given (including, but not limited 6 to, base salary) and continue the Executive as a participant in all compensation, benefit and insurance plans in which the Executive was participating when the notice giving rise to the dispute was given, until the dispute is finally resolved in accordance with this Section. Amounts paid under this Section 5(e) are in addition to all other amounts due under this Agreement and shall not be offset against or reduce any other amounts under this Agreement. 6. Compensation Upon Termination or During Disability. Upon termination -------------------------------------------------- of the Executive's employment or during a period of Disability, the Executive shall be entitled to the following benefits: (a) During any period that the Executive fails to perform her full-time duties with the Company as a result of Disability, the Company shall pay the Executive her base salary as in effect at the commencement of any such period and the amount of any other form or type of compensation otherwise payable for such period if the Executive were not so disabled, until such time as the Executive is determined to be eligible for long term disability benefits in accordance with the Company's insurance program then in effect or the Executive is terminated for Disability. (b) If the Executive's employment shall be terminated by the Company for Cause or by the Executive other than for Good Reason, then the Company shall pay to the Executive her full base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given and the Company shall have no further obligation to the Executive under this Agreement, except with respect to any benefits to which the Executive is entitled under any Company pension or welfare plan, insurance program or as otherwise required by law. (c) If the Executive's employment shall be terminated by the Company for Disability or by reason of the Executive's death, then the Company shall (i) immediately commence payment to the Executive (or the Executive's designated beneficiaries or estate, if no beneficiary is designated) of any and all benefits to which the Executive is entitled under the Company's retirement and insurance programs then in effect, (ii) immediately pay the Executive (or the executor or administrator of the Executive's estate) for all vacation time earned but not used through the Date of Termination and (iii) pay the Executive (or the executor or administrator of the Executive's estate) the bonus payment in accordance with Section 6(e) below. (d) If the Executive's employment shall be terminated (A) by the Company without Cause (excluding termination for Disability or by reason of the Executive's death), or (B) by the Executive for Good Reason, then notwithstanding such termination, the Executive shall be entitled to the benefits provided below: (i) The Company shall continue to pay the Executive her base salary at the rate in effect immediately prior to the Notice of Termination (or, if higher, at the rate in effect immediately prior to the reduction giving rise to the Executive's termination for Good Reason in accordance with Section 5(b)(i)(B) above) for the remaining term of this Agreement (the "Severance Period"). 7 (ii) The Executive will be paid for all vacation time earned but not used through her Date of Termination, but vacation will not continue to accrue after such date. (iii) During the Severance Period, the Company shall also (A) continue to reimburse the Executive for the premium cost of any life or long term disability insurance maintained by the Executive pursuant to this Agreement on substantially the same terms as prior to the Notice of Termination, and (B) if the Executive is eligible for and elects continuation coverage under one or more group health plans sponsored by the Company, and is not otherwise eligible to receive such coverage pursuant to another employer's plan, pay the same portion of the premium cost of such coverage, if any, as is paid by the Company for members of its management team who are actively employed. Except as set forth above, after her Date of Termination the Executive's benefits under any other applicable employee benefit plans will be determined in accordance with the terms of such plans then in effect or as otherwise required by law. (iv) The amount of compensation and benefit payments to the Executive during the Severance Period shall be offset by any compensation or benefit payments by another employer, or by a self proprietorship if the Executive is self employed, to Employee during the Severance Period; provided that there shall be no offset with respect to any compensation or benefit payments derived from the continuation of any business activities in which the Executive was engaged prior to the Date of Termination and which are expressly permitted under Section 2 above. (e) If the Executive's employment shall be terminated (i) by the Company other than for Cause (including termination for Disability or by reason of the Executive's death), or (ii) by the Executive for Good Reason, prior to the end of any fiscal year, then notwithstanding such termination or the terms of any bonus plan to the contrary, the Executive shall be entitled to a bonus if the earnings thresholds for the applicable fiscal year have been achieved as of the last day of the fiscal year in which her termination of employment occurs; provided, however, that the amount of such bonus shall be calculated by multiplying the bonus amount that would have been payable to the Executive, had her employment not terminated during the fiscal year, by a fraction, the numerator of which is the number of full weeks of employment completed by the Executive during such fiscal year and the denominator of which is 52. Notwithstanding the foregoing, if the Executive's employment shall be terminated (A) by the Company without Cause (excluding termination for Disability or by reason of the Employee's death), or (B) by the Executive for Good Reason, then notwithstanding such termination or the terms of any bonus plan to the contrary, the Executive shall be entitled to bonuses under the Special Incentive Plan referred to in Section 3(b)(ii) above with respect to each of the remaining fiscal years of the plan (including the year in which her termination of employment occurs) if the earnings thresholds for each applicable fiscal year have been achieved as of the last day of each such fiscal year; provided that each such bonus payment shall be in the amount that would have been payable to the Executive had her employment not been terminated; and provided, further, that if 8 termination of the Executive's employment under the circumstances described above occurs upon or following a Change in Control, 50% of the Executive's bonus target under the Special Incentive Plan for such remaining years will be guaranteed. If the Executive's employment shall be terminated (A) by the Company for Cause, or (B) by the Executive other than for Good Reason, prior to the end of any fiscal year, then no bonus shall be payable for such year. Any bonus amount payable pursuant to this Section 6(e) shall be paid at the same time bonuses are paid to other senior executives of the Company, and shall be payable in cash. (f) The Company's obligation to make the payments provided by Section 6(d) or (e) is conditioned upon the Executive's execution of a customary release of claims relating to the termination of the Executive's employment with the Company, in favor of the Company, its affiliates, and their respective directors, officers, employees and agents. (g) If the Executive's employment shall be terminated (i) by the Company other than for Cause, or (ii) by the Executive for Good Reason, then (A) any unvested portion of the stock option referred to in Section 4(a) shall automatically vest and become exercisable immediately prior to the Date of Termination, and (B) any unvested restricted shares of NEBS stock awarded in connection with the Special Incentive Plan and then held by the Executive shall thereupon vest in the Executive (or, in the case of death, in the person or persons to whom such shares pass by will or by the laws of descent and distribution), and shall be delivered to the Executive, or to the executor or administrator of her estate, upon satisfaction of all applicable income, employment and other tax withholding obligations. (h) All amounts payable to the Executive hereunder are subject to such income, employment and other tax withholding obligations as are required by applicable law. (i) If the Executive's employment is terminated by the Company without Cause following the term of this Agreement, the Executive shall be entitled to severance benefits consistent with the Company's historical policy and practice with respect to corporate officers. 7. Non-Disclosure of Company Information; Non-Competition. ------------------------------------------------------ (a) The Executive understands that she will have access to confidential and proprietary information of the Company (including its subsidiaries and affiliates) and hereby agrees that she will treat all such information as confidential and proprietary information of the Company (or of such subsidiary or affiliate, as the case may be) and she will not, either directly or indirectly, copy, use or disclose any such confidential or proprietary information which she may either obtain or develop during employment with the Company to any person, firm, company, association or other entity, unless such copying, use or disclosure is for the exclusive benefit of the Company as the Company may direct or she is otherwise required to do so by law. (b) At such time as the Executive's employment with the Company terminates, regardless of the reason, the Executive shall return to the Company any and all 9 confidential and proprietary information of the Company, customer files and all copies of such information, whether stored on paper or electronically, which the Executive may have acquired or developed during her employment with the Company and any other property of the Company, regardless of the confidential or proprietary nature of such property, which the Executive may have in her possession at that time. (c) During the term of this Agreement and while the Executive is employed by the Company, the Executive shall not, directly or indirectly, engage in any business or sales activity or other endeavor which competes with the business of the Company (or of any of its subsidiaries or affiliates), whether as an employee, agent, independent contractor, consultant, advisor, director, owner (except as a holder of not more than 1% of the outstanding stock of a publicly- traded company) or sole proprietor of another organization or entity. In addition, for a period of six months following the termination of the Executive's employment with the Company for Cause by the Company or for any reason by the Executive other than for Good Reason, the Executive shall not, directly or indirectly, anywhere within the United States, Canada and such other countries in which the Company conducts business during her employment, own (except as a holder of not more than 1% of the outstanding stock of a publicly- traded company), manage, operate, control, be employed by, render services to, participate in or be connected in any manner with any business which is competitive to the Company's business, including, without limitation, any business which buys, sells, manufactures, distributes, markets or promotes (i) apparel products to golf sports shops and to promotional products/advertising specialty industry customers or (ii) personalized apparel products targeted to small businesses for professional image, promotional or advertising specialty uses, it being recognized that (A) if the Executive's employment is terminated by the Company other than for Cause or by the Executive for Good Reason, the restrictions of this Section 7(c) shall not apply after the termination of her employment, and (B) the restrictions of this Section 7(c) shall not apply with respect to any period during which the Company fails to continue making payments to the Executive at her base salary rate as set forth in Section 3(a) above. (d) For a period ending six months following termination of the Executive's employment with the Company, if the Executive's employment with the Company is terminated by the Company for Cause or by the Executive other than for Good Reason, then the Executive agrees that she will not, either directly or indirectly, solicit, hire, employ, retain or otherwise contact any employee of the Company, any independent contractor or sales representative of the Company or any person who has been an employee of the Company during the one-year period prior to the termination of the Executive's employment with the Company, nor assist any other person or entity to solicit or hire any such individual. (e) The Executive acknowledges that the restrictions set forth in this Section 7 are reasonably necessary to protect a legitimate business interest of the Company and that the Company has no adequate remedy at law for any breach of the provisions of this Section 7 by the Executive and that such breach will result in irreparable harm to the Company. Accordingly, in the event of the breach by the Executive of any of the provisions of this Section 7, the Company will have no further obligations to her under this Agreement, including without limitation the payments described in Section 6(d) and (e) above, and in 10 addition and supplementary to any other rights and remedies existing in its favor, the Company shall be entitled to seek specific performance and/or injunctive or other relief in order to enforce or prevent any violation of the provisions hereof. 8. Successors; Binding Agreement. ----------------------------- (a) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to 51% or more of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to the compensation and benefits from the Company in the same amount and on the same terms as she would be entitled hereunder if she terminated her employment for Good Reason, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. (b) This Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, successors, heirs, and designated beneficiaries. If the Executive should die while any amount would still be payable to the Executive hereunder if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive's designated beneficiaries, or, if there is no such designated beneficiary, to the Executive's estate. 9. Notice. For the purposes of this Agreement, notices and all other ------ communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed to the last known residence address of the Executive or in the case of the Company, to its principal office to the attention of at least one of the directors of the Company, with a copy to NEBS, 500 Main Street, Groton, MA 01471, Attention: President (provided that notice to the Company shall not be effective unless a copy of such notice is delivered to NEBS as aforesaid), or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. 10. Miscellaneous. No provision of this Agreement may be modified, waived ------------- or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the parties. No waiver by either party hereto at any time of any breach by the other party to this Agreement of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or similar time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. The validity, interpretation, construction and performance of this 11 Agreement shall be governed by the laws of the State of Minnesota. Each of the parties consents to personal jurisdiction in any action brought in any court, federal or state, of competent jurisdiction within the State of Minnesota, waives any argument that such a forum is not convenient, and agrees that any litigation or arbitration relating to this Agreement shall be venued in Hennepin County, Minnesota. If the Merger Agreement is terminated for any reason prior to the occurrence of the Merger, then this Agreement shall automatically be deemed to have been terminated and cancelled, without any further liability of either party or of NEBS to each other. 11. Severability. Any term or provision of this Agreement that is invalid ------------ or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. If the final judgment of a court of competent jurisdiction declares that any term or provision hereof is invalid or unenforceable, the parties agree that the court making the determination of invalidity or unenforceability shall have the power to reduce the scope, duration or area of the term or provision, to delete specific words or phrases or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified after the expiration of the time within which the judgment may be appealed. [Signature Page Follows] 12 IN WITNESS WHEREOF, the undersigned officer, on behalf of PremiumWear, Inc., and the Executive have hereunto set their hands as of the date first above written. PREMIUMWEAR, INC. By: /s/ David E. Berg ------------------------------- Its Chief Executive Officer EXECUTIVE: /s/ Cynthia L. Boeddeker ------------------------------- Cynthia L. Boeddeker 13 EX-99.4C 6 0006.txt EMPLOYMENT AGREEMENT-JAMES BURY EXHIBIT 99.4(c) EMPLOYMENT AGREEMENT THIS AGREEMENT is made and entered into by and between PremiumWear, Inc., a Delaware corporation with its principal offices at 5500 Feltl Road, Minnetonka, Minnesota (the "Company"), and James S. Bury, residing at New Hope, Minnesota (the "Executive"), and shall be effective as of this 26th day of May, 2000. WHEREAS, pursuant to an Agreement and Plan of Merger dated as of May 26, 2000 (the "Merger Agreement"), by and among New England Business Service, Inc., a Delaware corporation ("NEBS"), Penguin Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of NEBS ("Sub"), and the Company, Sub will offer to purchase shares of the Company's common stock pursuant to a tender offer, and upon successful completion of the tender offer, will thereafter be merged with and into the Company (the "Merger"), with the Company being the surviving corporation in the Merger and a wholly-owned subsidiary of NEBS; and WHEREAS, the Company desires to secure the continuation of the Executive's services as Chief Financial Officer following the Merger, and the Executive desires to perform such services for the Company, on the terms and conditions as set forth herein; NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements of the parties herein contained, the parties hereto agree as follows: 1. Term. This Agreement shall be effective from and after the date hereof ---- and shall continue in effect through June 30, 2004. Except as expressly provided herein, this Agreement shall neither impose nor confer any further rights or obligations on the Company or the Executive on the day after the end of the term of this Agreement. Expiration of the term of this Agreement of itself and without subsequent action by the Company or the Executive shall not end the employment relationship between the Company and the Executive. 2. Duties. The Executive is engaged to and shall render services in the ------ position of Chief Financial Officer of the Company through June 30, 2002; thereafter, and for the remainder of the term hereunder, the Executive shall render services as requested on a part-time basis (up to 30 hours a week) within the scope of his expertise and experience. In this regard, the Executive shall perform such services as are appropriate to his position and such other services that are assigned to him from time to time by such person as the Board of Directors may designate from time to time (the "Designated Person"). During the period from the date hereof through June 30, 2002, the Executive will devote his full time, attention and skill to the business and affairs of the Company during normal working hours, and at all times during the term hereof he will use his best efforts to advance the Company's interests, and will not engage in outside business activities, except for managing passive investments, serving on other corporate, civic or charitable boards or committees and providing tax preparation services for individuals consistent 1 with his past practice, provided that such permitted outside activities do not significantly interfere with the performance of his duties hereunder. 3. Compensation. ------------ (a) Base Salary. During the term of the Executive's employment hereunder prior to June 30, 2002, the Company will pay to the Executive an annual base salary of $136,000, such salary to be paid in conformity with the Company's policies relating to salaried employees. During the term of the Executive's employment hereunder after June 30, 2002, the Company will pay to the Executive an annual base salary of $68,000, payable in the same manner as aforesaid. The Executive's base salary will be subject to annual review and may be increased, but not decreased, by the Company's Board of Directors, based on the recommendation of the Designated Person. (b) Bonus. Following the Merger, the Executive will participate in an Annual Executive Bonus Plan for NEBS' fiscal years 2001 and 2002, with a bonus target equal to 50% of base salary. Payments will be determined against financial and personal objectives established by NEBS' Board of Directors and the Designated Person at the beginning of each fiscal year, which objectives will include Company-specific objectives, as well as NEBS' overall corporate objectives; provided, however, that 50% of the Executive's bonus target for fiscal 2001 will be guaranteed, and all payments to the Executive under the Annual Executive Bonus Plan will be paid in cash within 60 days following the end of the applicable fiscal year. The financial objectives established for the Annual Executive Bonus Plan for fiscal year 2001 that will be applicable to the Executive are set forth in Attachment A hereto. The Executive will not participate in any bonus plan or program with respect to any period following the end of NEBS' fiscal year 2002. Upon the effective date of the Merger, the Executive's participation in the Company's 2000 Bonus Plan (the "2000 Bonus Plan") will cease; provided, however, that, within 60 days following the Merger, the Company will pay the Executive the pro-rated amount of the bonus for which the Executive was otherwise eligible under the 2000 Bonus Plan (assuming for these purposes that the plan permits pro-rated payouts) with respect to the period from January 2, 2000 through the effective date of the Merger. 4. Additional Benefits. ------------------- (a) Stock Options. Immediately following the Merger, the Executive will be granted an option to purchase 8,000 shares of NEBS common stock. The portion of the option that vests on the date of grant will, to the extent permitted by applicable law, be granted in the form of incentive stock options, and such portion as qualifies for incentive stock option status will be granted under the NEBS 1997 Key Employee and Eligible Director Stock Option and Stock Appreciation Rights Plan (the "1997 Plan"); the remaining portion of the option will be granted on terms substantially similar to the 1997 Plan and will be in the form of options that do not qualify as incentive stock options. The exercise price for such option will be the fair market value of NEBS common stock on the date of grant, as determined in accordance with the 1997 Plan. The option will vest 2 as to one-third of the option shares on the date of grant, and as to an additional one-third per year on each of the first two anniversaries of the date of grant, and will have a maximum term of ten years, subject to earlier termination in accordance with the terms of the 1997 Plan. (b) Other Benefits. (i) The Executive will be entitled to and will receive such other employee benefits, such as 401(k), hospitalization, medical, life and other insurance benefits, vacation, sick pay and short-term and long-term disability that are now being maintained by the Company for the benefit of senior executives, subject to the terms, conditions, and overall administration of such benefits and to the right of the Company to hereafter change the level of such benefits as part of a general change in policy affecting senior executives of the Company generally; provided that any action by the Company which would directly or indirectly materially reduce any of such benefits and which remains uncured after 30 days following the delivery of the Executive's written notice of such breach to the Company in accordance with Section 9 below will entitle the Executive to terminate his employment hereunder for Good Reason (as defined below); and provided, further, that so long as the Company does not reduce its portion (in either dollars or percentage of total premium cost) of the Executive's premium cost for the group health plans in which the Executive participates, any increase in the Executive's co-payment amount for such premiums shall not be deemed to be a reduction in the Executive's benefits provided by this Section. (ii) The Company will promptly pay (or reimburse the Executive for) all reasonable business expenses incurred by him in the performance of his duties hereunder in accordance with policies from time to time adopted by the Board of Directors or by NEBS, including business travel and entertainment expenses. The Executive shall furnish to the Company such receipts and records as the Company may require to verify the foregoing expenses. 5. Termination of Employment. ------------------------- (a) Termination by the Company. The Company may terminate the Executive's employment with the Company hereunder at any time: (i) upon the death or Disability (as hereinafter defined) of the Executive. For purposes of this Agreement, "Disability" shall be deemed the reason for the Company's termination of the Executive's employment with the Company if, as a result of the Executive's incapacity due to mental or physical disability, the Executive is absent from the full-time performance of his duties with the Company for at least 6 consecutive months, and within 30 days after written Notice of Termination (as defined below) is given the Executive shall not have returned to the full-time performance of his duties. Any question as to the existence of the Executive's Disability upon which the Executive and the Company cannot agree shall be determined by a qualified independent physician selected by the Executive (or, if the 3 Executive is unable to make such selection, it shall be made by any adult member of the Executive's immediate family), and reasonably approved by the Company. The determination of such physician made in writing to the Company and to the Executive shall be final and conclusive for all purposes of this Agreement, absent fraud. (ii) for Cause. For purpose of this Agreement, "Cause" shall mean (A) the willful and continued failure by the Executive (other than any such failure resulting from (1) the Executive's incapacity due to physical or mental illness or death, (2) any such actual or anticipated failure after the issuance of a Notice of Termination by the Executive for Good Reason, or (3) the Company's active or passive obstruction of the performance of the Executive's duties and responsibilities) to perform substantially the duties and responsibilities of the Executive's position with the Company after a written demand for substantial performance, signed by a majority of the Company's Board of Directors, is delivered to the Executive, which demand specifically identifies the manner in which the directors believe that the Executive has not substantially performed his duties or responsibilities; (B) the conviction of the Executive by a court of competent jurisdiction for felony criminal conduct; (C) the willful engaging by the Executive in fraud or dishonesty which is demonstrably and materially injurious to the Company or its reputation, monetarily or otherwise; or (D) the Executive's violation of Section 7 of this Agreement (other than violations of Section 7(a) that are both inadvertent and immaterial). No act, or failure to act, on the Executive's part shall be deemed "willful" unless committed, or omitted by the Executive in bad faith and without a reasonable belief that the Executive's act or failure to act was in the best interest of the Company. The Executive shall not be terminated for Cause unless and until the Company shall have delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of NEBS' Board of Directors at a meeting of said Board called and held for such purpose (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive's counsel, to be heard by said Board), finding that, in the good faith opinion of said Board, the Executive's conduct was Cause and specifying the particulars thereof in detail. (iii) without Cause, provided that in such case the Executive shall be entitled to the benefits set forth in Section 6(d) and (e) below. (b) Termination by the Executive. The Executive may terminate his employment with the Company hereunder at any time: (i) for Good Reason. "Good Reason" shall mean, without the Executive's express written consent, any of the following: (A) the assignment to the Executive of any duties inconsistent with the Executive's status or position with the Company, or a substantial alteration in the nature or status of the Executive's responsibilities from those in effect immediately prior to the Merger; (B) a reduction by the Company in the Executive's annual base salary or bonus targets; (C) (1) the relocation of the Company's principal executive offices to a location more than 50 miles from Minnetonka, Minnesota; or (2) the Company requiring the Executive to be based anywhere other than the Company's principal executive offices except for required 4 travel on the Company's business to the extent reasonably consistent with the Company's strategic business plan, and except to the extent for travel in connection with the Executive's management reporting, planning and training responsibilities to NEBS; (D) the taking of any action by the Company which would directly or indirectly materially reduce any of the other benefits described in Section 4(b) and which remains uncured after 30 days following the delivery of the Executive's written notice of such breach to the Company in accordance with Section 9 below; or (E) any material violation of this Agreement by the Company which remains uncured after 30 days following the delivery of the Executive's written notice of such breach to the Company in accordance with Section 9 below. The Executive acknowledges that he will not be entitled to terminate his employment with the Company for Good Reason solely by reason of (x) the consummation of the transactions contemplated by the Merger Agreement (and any subsequent transactions directly related thereto and contemplated thereby), including his resignation or removal from the board of directors or as Treasurer of the Company or any of its subsidiaries, or any change in his reporting responsibilities to reflect the fact that the Company is a subsidiary of NEBS, or (y) the reduction in the Executive's salary as expressly provided in Section 3(a) above, or the discontinuation of the Executive's participation in any bonus plan or program as expressly provided in Section 3(b) above, or the reduction in any of the Executive's other benefits described in Section 4(b) resulting directly from the reduction in the Executive's base salary as expressly provided in Section 3(a) above, or (z) the Company's election not to extend the term of the Change in Control Severance Agreement dated as of September 23, 1999, as amended (the "Change in Control Agreement"), by and between the Company and the Executive, in accordance with the first sentence of Section 1 of the Change in Control Agreement. (ii) other than for Good Reason; provided that the Company retains the right to terminate the Executive's employment for Cause at any time during the notice period referred to in Section 5(d) below. (c) Notice of Termination. Any purported termination of the Executive's employment by the Company or by the Executive shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 9 below. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth the facts and circumstances claimed to provide a basis for termination of the Executive's employment. (d) Date of Termination. For purposes of this Agreement, "Date of Termination" shall mean: (i) If the Executive's employment is terminated for Disability, 30 days after the Notice of Termination is given (provided that the Executive shall have been absent from the full-time performance of his duties for at least 6 months and shall not have returned to the full-time performance of his duties during such 30-day period in accordance with Section 5(a)(i) hereof); and 5 (ii) If the Executive's employment is terminated pursuant to Section 5(a)(ii), 5(a)(iii) or 5(b) above or for any other reason (other than Disability), the date specified in the Notice of Termination (which, in the case of a termination pursuant to Section 5(a)(ii) above shall not be less than 10 days, and in the case of a termination pursuant to Section 5(b)(i) above shall not be less than 10 nor more than 30 days, and in the case of a termination pursuant to Section 5(b)(ii) above shall not be less than 60 days, respectively, from the date such Notice of Termination is given). If the Executive delivers a Notice of Termination in connection with an intended termination of employment by the Executive other than for Good Reason, the Company may, in its sole discretion, waive the requirement that the Executive remain employed during the entire notice period, and may fix an earlier date as the Date of Termination, which actions shall not under any circumstances be deemed to be a termination of the Executive's employment by the Company without Cause. (e) Dispute of Termination. If, within 10 days after any Notice of Termination is given, the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be the date on which the dispute is finally determined, either by mutual written agreement of the parties, or by a final judgment, order or decree of a court of competent jurisdiction (which is not appealable or the time for appeal therefrom having expired and no appeal having been perfected); provided, that the Date of Termination shall be extended by a notice of dispute only if such notice is given in good faith and the party giving such notice pursues the resolution of such dispute with reasonable diligence. Notwithstanding the pendency of any such dispute, the Company shall continue to pay the Executive full compensation in effect when the notice giving rise to the dispute was given (including, but not limited to, base salary) and continue the Executive as a participant in all compensation, benefit and insurance plans in which the Executive was participating when the notice giving rise to the dispute was given, until the dispute is finally resolved in accordance with this Section. Amounts paid under this Section 5(e) are in addition to all other amounts due under this Agreement and shall not be offset against or reduce any other amounts under this Agreement. 6. Compensation Upon Termination or During Disability. Upon termination -------------------------------------------------- of the Executive's employment or during a period of Disability, the Executive shall be entitled to the following benefits: (a) During any period that the Executive fails to perform his full-time duties with the Company as a result of Disability, the Company shall pay the Executive his base salary as in effect at the commencement of any such period (provided that such payments with respect to any period after June 30, 2002 will be reduced as contemplated by Section 3(a) above) and the amount of any other form or type of compensation otherwise payable for such period if the Executive were not so disabled, until such time as the Executive is determined to be eligible for long term disability benefits in accordance with the Company's insurance program then in effect or the Executive is terminated for Disability. 6 (b) If the Executive's employment shall be terminated by the Company for Cause or by the Executive other than for Good Reason, then the Company shall pay to the Executive his full base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given (provided that such payments with respect to any period after June 30, 2002 will be reduced as contemplated by Section 3(a) above) and the Company shall have no further obligation to the Executive under this Agreement, except with respect to any benefits to which the Executive is entitled under any Company pension or welfare plan, insurance program or as otherwise required by law. (c) If the Executive's employment shall be terminated by the Company for Disability or by reason of the Executive's death, then the Company shall (i) immediately commence payment to the Executive (or the Executive's designated beneficiaries or estate, if no beneficiary is designated) of any and all benefits to which the Executive is entitled under the Company's retirement and insurance programs then in effect, (ii) immediately pay the Executive (or the executor or administrator of the Executive's estate) for all vacation time earned but not used through the Date of Termination and (iii) pay the Executive (or the executor or administrator of the Executive's estate) the bonus payment in accordance with Section 6(e) below. (d) If the Executive's employment shall be terminated (A) by the Company without Cause (excluding termination for Disability or by reason of the Executive's death), or (B) by the Executive for Good Reason, then notwithstanding such termination, the Executive shall be entitled to the benefits provided below: (i) The Company shall continue to pay the Executive his base salary at the rate in effect immediately prior to the Notice of Termination (or, if higher, at the rate in effect immediately prior to the reduction giving rise to the Executive's termination for Good Reason in accordance with Section 5(b)(i)(B) above) for the remaining term of this Agreement (the "Severance Period"); provided that the Company's obligation to make such payments with respect to any period after June 30, 2002 will be reduced as contemplated by Section 3(a) above. (ii) The Executive will be paid for all vacation time earned but not used through his Date of Termination, but vacation will not continue to accrue after such date. (iii) During the Severance Period, the Company shall also (A) continue to reimburse the Executive for the premium cost of any life or long term disability insurance maintained by the Executive pursuant to this Agreement on substantially the same terms as prior to the Notice of Termination (provided that, with respect to any period after June 30, 2002, the amount of such insurance benefits will be reduced to reflect the reduction in the Executive's base salary as expressly provided in Section 3(a) above), and (B) if the Executive is eligible for and elects continuation coverage under one or more group health plans sponsored by the Company, and is not otherwise eligible to receive such coverage pursuant to another employer's plan, pay the same portion of the premium cost of such coverage, if any, as is paid by the Company for members of its management team who are actively employed. Except 7 as set forth above, after his Date of Termination the Executive's benefits under any other applicable employee benefit plans will be determined in accordance with the terms of such plans then in effect or as otherwise required by law. (iv) The amount of compensation and benefit payments to the Executive during the Severance Period shall be offset by any compensation or benefit payments by another employer, or by a self proprietorship if the Executive is self employed, to Employee during the Severance Period; provided that there shall be no offset with respect to any compensation or benefit payments derived from the continuation of any business activities in which the Executive was engaged prior to the Date of Termination and which are expressly permitted under Section 2 above. (e) If the Executive's employment shall be terminated (i) by the Company other than for Cause (including termination for Disability or by reason of the Executive's death), or (ii) by the Executive for Good Reason, prior to the end of any fiscal year, then notwithstanding such termination or the terms of any bonus plan to the contrary, the Executive shall be entitled to a bonus if the earnings thresholds for the applicable fiscal year have been achieved as of the last day of the fiscal year in which his termination of employment occurs; provided, however, that the amount of such bonus shall be calculated by multiplying the bonus amount that would have been payable to the Executive, had his employment not terminated during the fiscal year, by a fraction, the numerator of which is the number of full weeks of employment completed by the Executive during such fiscal year and the denominator of which is 52. If the Executive's employment shall be terminated (A) by the Company for Cause, or (B) by the Executive other than for Good Reason, prior to the end of any fiscal year, then no bonus shall be payable for such year. Any bonus amount payable pursuant to this Section 6(e) shall be paid at the same time bonuses are paid to other senior executives of the Company, and shall be payable in cash. (f) The Company's obligation to make the payments provided by Section 6(d) or (e) is conditioned upon the Executive's execution of a customary release of claims relating to the termination of the Executive's employment with the Company, in favor of the Company, its affiliates, and their respective directors, officers, employees and agents. (g) If the Executive's employment shall be terminated (i) by the Company other than for Cause, or (ii) by the Executive for Good Reason, then any unvested portion of the stock option referred to in Section 4(a) shall automatically vest and become exercisable immediately prior to the Date of Termination. (h) All amounts payable to the Executive hereunder are subject to such income, employment and other tax withholding obligations as are required by applicable law. 7. Non-Disclosure of Company Information; Non-Competition. ------------------------------------------------------ (a) The Executive understands that he will have access to confidential and proprietary information of the Company (including its subsidiaries and affiliates) and hereby agrees that he will treat all such information as confidential and proprietary 8 information of the Company (or of such subsidiary or affiliate, as the case may be) and he will not, either directly or indirectly, copy, use or disclose any such confidential or proprietary information which he may either obtain or develop during employment with the Company to any person, firm, company, association or other entity, unless such copying, use or disclosure is for the exclusive benefit of the Company as the Company may direct or he is otherwise required to do so by law. (b) At such time as the Executive's employment with the Company terminates, regardless of the reason, the Executive shall return to the Company any and all confidential and proprietary information of the Company, customer files and all copies of such information, whether stored on paper or electronically, which the Executive may have acquired or developed during his employment with the Company and any other property of the Company, regardless of the confidential or proprietary nature of such property, which the Executive may have in his possession at that time. (c) During the term of this Agreement and while the Executive is employed by the Company, the Executive shall not, directly or indirectly, engage in any business or sales activity or other endeavor which competes with the business of the Company (or of any of its subsidiaries or affiliates), whether as an employee, agent, independent contractor, consultant, advisor, director, owner (except as a holder of not more than 1% of the outstanding stock of a publicly- traded company) or sole proprietor of another organization or entity. In addition, for a period of six months following the termination of the Executive's employment with the Company for Cause by the Company or for any reason by the Executive other than for Good Reason, the Executive shall not, directly or indirectly, anywhere within the United States, Canada and such other countries in which the Company conducts business during his employment, own (except as a holder of not more than 1% of the outstanding stock of a publicly- traded company), manage, operate, control, be employed by, render services to, participate in or be connected in any manner with any business which is competitive to the Company's business, including, without limitation, any business which buys, sells, manufactures, distributes, markets or promotes (i) apparel products to golf sports shops and to promotional products/advertising specialty industry customers or (ii) personalized apparel products targeted to small businesses for professional image, promotional or advertising specialty uses, it being recognized that (A) if the Executive' s employment is terminated by the Company other than for Cause or by the Executive for Good Reason, the restrictions of this Section 7(c) shall not apply after the termination of his employment, and (B) the restrictions of this Section 7(c) shall not apply with respect to any period during which the Company fails to continue making payments to the Executive at his base salary rate as set forth in Section 3(a) above. (d) For a period ending six months following termination of the Executive's employment with the Company, if the Executive's employment with the Company is terminated by the Company for Cause or by the Executive other than for Good Reason, then the Executive agrees that he will not, either directly or indirectly, solicit, hire, employ, retain or otherwise contact any employee of the Company, any independent contractor or sales representative of the Company or any person who has been an employee of the Company during the one-year period prior to the termination of the 9 Executive's employment with the Company, nor assist any other person or entity to solicit or hire any such individual. (e) The Executive acknowledges that the restrictions set forth in this Section 7 are reasonably necessary to protect a legitimate business interest of the Company and that the Company has no adequate remedy at law for any breach of the provisions of this Section 7 by the Executive and that such breach will result in irreparable harm to the Company. Accordingly, in the event of the breach by the Executive of any of the provisions of this Section 7, the Company will have no further obligations to him under this Agreement, including without limitation the payments described in Section 6(d) and (e) above, and in addition and supplementary to any other rights and remedies existing in its favor, the Company shall be entitled to seek specific performance and/or injunctive or other relief in order to enforce or prevent any violation of the provisions hereof. 8. Successors; Binding Agreement. ----------------------------- (a) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to 51% or more of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to the compensation and benefits from the Company in the same amount and on the same terms as he would be entitled hereunder if he terminated his employment for Good Reason, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. (b) This Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, successors, heirs, and designated beneficiaries. If the Executive should die while any amount would still be payable to the Executive hereunder if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive's designated beneficiaries, or, if there is no such designated beneficiary, to the Executive's estate. 9. Notice. For the purposes of this Agreement, notices and all other ------ communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed to the last known residence address of the Executive or in the case of the Company, to its principal office to the attention of at least one of the directors of the Company, with a copy to NEBS, 500 Main Street, Groton, MA 01471, Attention: President (provided that notice to the Company shall not be effective unless a copy of such notice is delivered to NEBS as aforesaid), or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. 10 10. Miscellaneous. No provision of this Agreement may be modified, waived ------------- or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the parties. No waiver by either party hereto at any time of any breach by the other party to this Agreement of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or similar time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Minnesota. Each of the parties consents to personal jurisdiction in any action brought in any court, federal or state, of competent jurisdiction within the State of Minnesota, waives any argument that such a forum is not convenient, and agrees that any litigation or arbitration relating to this Agreement shall be venued in Hennepin County, Minnesota. Notwithstanding anything herein to the contrary, this Agreement is intended to supersede the Employment Agreement dated as of April 24, 1990 (the 4/24/90 Employment Agreement") by and between the Company and the Executive; provided, however, that if the Merger Agreement is terminated for any reason prior to the occurrence of the Merger, then this Agreement shall automatically be deemed to have been terminated and cancelled, without any further liability of either party or of NEBS to each other, and the 4/24/90 Employment Agreement shall automatically be reinstated and thereafter shall remain in full force and effect. 11. Severability. Any term or provision of this Agreement that is invalid ------------ or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. If the final judgment of a court of competent jurisdiction declares that any term or provision hereof is invalid or unenforceable, the parties agree that the court making the determination of invalidity or unenforceability shall have the power to reduce the scope, duration or area of the term or provision, to delete specific words or phrases or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified after the expiration of the time within which the judgment may be appealed. [Signature Page Follows] 11 IN WITNESS WHEREOF, the undersigned officer, on behalf of PremiumWear, Inc., and the Executive have hereunto set their hands as of the date first above written. PREMIUMWEAR, INC. By: /s/ David E. Berg ---------------------------- David E. Berg Its Chief Executive Officer EXECUTIVE: /s/ James S. Bury ---------------------------- James S. Bury 12 EX-99.4D 7 0007.txt EMPLOYMENT AGREEMENT-TIMOTHY KLOUDA EXHIBIT 99.4(d) EMPLOYMENT AGREEMENT THIS AGREEMENT is made and entered into by and between PremiumWear, Inc., a Delaware corporation with its principal offices at 5500 Feltl Road, Minnetonka, Minnesota (the "Company"), and Timothy C. Klouda, residing at Chanhassen, Minnesota (the "Executive"), and shall be effective as of this 26th day of May, 2000. WHEREAS, pursuant to an Agreement and Plan of Merger dated as of May 26, 2000 (the "Merger Agreement"), by and among New England Business Service, Inc., a Delaware corporation ("NEBS"), Penguin Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of NEBS ("Sub"), and the Company, Sub will offer to purchase shares of the Company's common stock pursuant to a tender offer, and upon successful completion of the tender offer, will thereafter be merged with and into the Company (the "Merger"), with the Company being the surviving corporation in the Merger and a wholly-owned subsidiary of NEBS; and WHEREAS, the Company desires to secure the continuation of the Executive's services as President of the Promotional Products Division following the Merger, and the Executive desires to perform such services for the Company, on the terms and conditions as set forth herein; NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements of the parties herein contained, the parties hereto agree as follows: 1. Term. This Agreement shall be effective from and after the date hereof ---- and shall continue in effect through June 30, 2004 (the "Term"). The Company, NEBS and the Executive shall meet in the first thirty (30) days of the fourth year of the Term to discuss whether this Agreement should be renewed or extended beyond the original four-year Term. Except as expressly provided herein, this Agreement shall neither impose nor confer any further rights or obligations on the Company or the Executive on the day after the end of the term of this Agreement. Expiration of the term of this Agreement of itself and without subsequent action by the Company or the Executive shall not end the employment relationship between the Company and the Executive. 2. Duties. The Executive is engaged to and shall render services in the ------ position of President of the Promotional Products Division. In this regard, the Executive shall perform such services as are appropriate to that position and such other services that are assigned to him from time to time by such person as the Board of Directors may designate from time to time (the "Designated Person"). The Executive will devote his full time, attention and skill to the business and affairs of the Company during normal working hours, and will use his best efforts to advance the Company's interests, and will not engage in outside business activities, except for managing passive investments, serving on other corporate, civic or charitable boards or committees and continuing his current and future investment and activities in Future Products, Inc. (subject to the 1 limitations set forth in Section 7(c) below), provided that such permitted outside business activities do not significantly interfere with the performance of his duties hereunder. 3. Compensation. ------------ (a) Base Salary. During the term of the Executive's employment hereunder, the Company will pay to the Executive an annual base salary of $240,000, such salary to be paid in conformity with the Company's policies relating to salaried employees. The Executive's base salary will be subject to annual review and may be increased, but not decreased, by the Company's Board of Directors, based on the recommendation of the Designated Person. (b) Bonus. The Executive will be eligible for the following incentive bonuses following the Merger: (i) The Executive will participate in an Annual Executive Bonus Plan, beginning with NEBS' fiscal year 2001, with a bonus target equal to 50% of base salary. Payments will be determined against financial and personal objectives established by NEBS' Board of Directors and the Designated Person at the beginning of each fiscal year, which objectives will include Company- specific objectives, as well as NEBS' overall corporate objectives; provided, however, that 50% of the Executive's bonus target for fiscal 2001 will be guaranteed, and all payments to the Executive under the Annual Executive Bonus Plan with respect to NEBS' fiscal years 2001 through 2004 will be paid in cash within 60 days following the end of the applicable fiscal year. The financial objectives established for the Annual Executive Bonus Plan for fiscal year 2001 that will be applicable to the Executive are set forth in Attachment A hereto. (ii) The Company will establish a Special Incentive Plan which will be in effect for NEBS' fiscal years 2001 through 2003, and the Executive will participate in this plan with an annual bonus target equal to $175,000. Payments will be determined against specific sales and earnings objectives for the Company, which objectives are set forth in Attachment B hereto; provided, however, that upon the occurrence of a Change in Control (as defined below), 50% of the Executive's bonus target for the remaining fiscal years of the plan (including the year in which the Change in Control occurs) will be guaranteed; provided, further, however, that the foregoing guarantee will not apply with respect to any fiscal year in which the Executive's employment is terminated (A) by the Company for Cause (as hereinafter defined) or (B) by the Executive other than for Good Reason (as hereinafter defined), or for subsequent fiscal years. For purposes of this Agreement, "Change in Control" has the same meaning, and is subject to the same limitations, as set forth in Section 2 of the First Amendment to Change in Control Severance Agreement dated as of May 26, 2000 by and between the Company and the Executive. Payments under the Special Incentive Plan will be made within 60 days following the end of the applicable fiscal year and will be in the form of restricted shares of NEBS common stock in lieu of cash, under NEBS' Stock Compensation 2 Plan, and such shares will vest six months following the end of the applicable fiscal year with respect to each respective award. Restricted share awards will be subject to the terms and conditions of restricted stock award agreements substantially in the form of Attachment C hereto. With respect to each award, if the aggregate fair market value of the awarded shares on the vesting date is less than the fair market value of such shares on the date of grant, then the Company will pay such difference to the Executive in cash within 10 days of the applicable vesting date. (iii) Upon the effective date of the Merger, the Executive's participation in the Company's 2000 Bonus Plan (the "2000 Bonus Plan") will cease; provided, however, that, within 60 days following the Merger, the Company will pay the Executive the pro-rated amount of the bonus for which the Executive was otherwise eligible under the 2000 Bonus Plan (assuming for these purposes that the plan permits pro-rated payouts) with respect to the period from January 2, 2000 through the effective date of the Merger. 4. Additional Benefits. ------------------- (a) Stock Options. Following the Merger, the Executive will be granted an option to purchase 20,000 shares of NEBS common stock. The portion of the option that vests on the date of grant will, to the extent permitted by applicable law, be granted in the form of incentive stock options, and such portion as qualifies for incentive stock option status will be granted under the NEBS 1997 Key Employee and Eligible Director Stock Option and Stock Appreciation Rights Plan (the "1997 Plan"); the remaining portion of the option will be granted on terms substantially similar to the 1997 Plan and will be in the form of options that do not qualify as incentive stock options. The exercise price for such option will be the fair market value of NEBS common stock on the date of grant, as determined in accordance with the 1997 Plan. The option will vest as to 25% of the option shares on the date of grant, and as to an additional 25% per year on each of the first three anniversaries of the date of grant, and will have a maximum term of ten years, subject to earlier termination in accordance with the terms of the 1997 Plan. (b) Other Benefits. (i) The Executive will be entitled to and will receive such other employee benefits, such as 401(k), hospitalization, medical, life and other insurance benefits, vacation, sick pay and short-term and long-term disability that are now being maintained by the Company for the benefit of senior executives, subject to the terms, conditions, and overall administration of such benefits and to the right of the Company to hereafter change the level of such benefits as part of a general change in policy affecting senior executives of the Company generally; provided that any action by the Company which would directly or indirectly materially reduce any of such benefits and which remains uncured after 30 days following the delivery of the Executive's written notice of such breach to the Company in accordance with Section 9 below will entitle the Executive to terminate his employment hereunder for Good Reason (as defined below); and provided, further, that so long as the Company does not reduce its portion (in either dollars or percentage of total premium cost) of the 3 Executive's premium cost for the group health plans in which the Executive participates, any increase in the Executive's co-payment amount for such premiums shall not be deemed to be a reduction in the Executive's benefits provided by this Section. (ii) The Company will promptly pay (or reimburse the Executive for) all reasonable business expenses incurred by him in the performance of his duties hereunder in accordance with policies from time to time adopted by the Board of Directors or by NEBS, including business travel and entertainment expenses. The Executive shall furnish to the Company such receipts and records as the Company may require to verify the foregoing expenses. (iii) The Company shall pay the Executive a vehicle allowance of up to $7,200 per year upon presentment of a monthly vehicle expense report or similar reimbursement request prepared by the Executive evidencing such vehicle expenses. If the Executive's employment with the Company terminates and the Company is not required to pay severance pursuant to Section 6(d), the Executive shall reimburse the Company for any vehicle lease payments the Company will become obligated to pay and actually pays under those vehicle leases which are in the name of Klouda-Lenz, Inc. and relate to a vehicle used by the Executive while employed by the Company pursuant to this Agreement. (iv) The Company understands that as of January 4, 1999, the Executive owned a $2,000,000 annuity. During the period of the Executive's employment with the Company hereunder, and promptly upon receipt from the Executive of evidence of a premium payment for such annuity, the Company shall reimburse the Executive for the premiums necessary to fund $1,000,000 of such annuity, up to a maximum of $18,000 per year. Such annuity shall remain the sole and exclusive property of the Executive at all times. 5. Termination of Employment. ------------------------- (a) Termination by the Company. The Company may terminate the Executive's employment with the Company hereunder at any time: (i) upon the death or Disability (as hereinafter defined) of the Executive. For purposes of this Agreement, "Disability" shall be deemed the reason for the Company's termination of the Executive's employment with the Company if, as a result of the Executive's incapacity due to mental or physical disability, the Executive is absent from the full-time performance of his duties with the Company for at least 6 consecutive months, and within 30 days after written Notice of Termination (as defined below) is given the Executive shall not have returned to the full-time performance of his duties. Any question as to the existence of the Executive's Disability upon which the Executive and the Company cannot agree shall be determined by a qualified independent physician selected by the Executive (or, if the Executive is unable to make such selection, it shall be made by any adult member of the Executive's immediate family), and reasonably approved by the Company. The 4 determination of such physician made in writing to the Company and to the Executive shall be final and conclusive for all purposes of this Agreement, absent fraud. (ii) for Cause. For purpose of this Agreement, "Cause" shall mean (A) the willful and continued failure by the Executive (other than any such failure resulting from (1) the Executive's incapacity due to physical or mental illness or death, (2) any such actual or anticipated failure after the issuance of a Notice of Termination by the Executive for Good Reason, or (3) the Company's active or passive obstruction of the performance of the Executive's duties and responsibilities) to perform substantially the duties and responsibilities of the Executive's position with the Company after a written demand for substantial performance, signed by a majority of the Company's Board of Directors, is delivered to the Executive, which demand specifically identifies the manner in which the directors believe that the Executive has not substantially performed his duties or responsibilities; (B) the conviction of the Executive by a court of competent jurisdiction for felony criminal conduct; (C) the willful engaging by the Executive in fraud or dishonesty which is demonstrably and materially injurious to the Company or its reputation, monetarily or otherwise; (D) the Executive's violation of Section 7 of this Agreement (other than violations of Section 7(a) that are both inadvertent and immaterial); or (E) a material breach involving fraud or bad faith by the Executive of the terms, conditions, representations or warranties of the Agreement and Plan of Merger, dated March 25, 1999, by and among the Company, the Executive and the other parties named therein (the "Klouda-Lenz Merger Agreement") which breach has not been cured by the Executive within 30 days of the Company's written notice to the Executive of such breach. No act, or failure to act, on the Executive's part shall be deemed "willful" unless committed, or omitted by the Executive in bad faith and without a reasonable belief that the Executive's act or failure to act was in the best interest of the Company. The Executive shall not be terminated for Cause unless and until the Company shall have delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of NEBS' Board of Directors at a meeting of said Board called and held for such purpose (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive's counsel, to be heard by said Board), finding that, in the good faith opinion of said Board, the Executive's conduct was Cause and specifying the particulars thereof in detail. (iii) without Cause, provided that in such case the Executive shall be entitled to the benefits set forth in Section 6(d) and (e) below. (b) Termination by the Executive. The Executive may terminate his employment with the Company hereunder at any time: (i) for Good Reason. "Good Reason" shall mean, without the Executive's express written consent, any of the following: (A) the assignment to the Executive of any duties inconsistent with the Executive's status or position with the Company, or a substantial alteration in the nature or status of the Executive's responsibilities from those in effect immediately prior to the Merger; (B) a reduction by the Company in 5 the Executive's annual base salary or bonus targets; (C) (1) the relocation of the Company's principal executive offices to a location more than 50 miles from Minnetonka, Minnesota; or (2) the Company requiring the Executive to be based anywhere other than the Company's principal executive offices except for required travel on the Company's business to the extent reasonably consistent with the Company's strategic business plan, and except to the extent for travel in connection with the Executive's management reporting, planning and training responsibilities to NEBS; (D) the taking of any action by the Company which would directly or indirectly materially reduce any of the other benefits described in Section 4(b) and which remains uncured after 30 days following the delivery of the Executive's written notice of such breach to the Company in accordance with Section 9 below; or (E) any material violation of this Agreement by the Company which remains uncured after 30 days following the delivery of the Executive's written notice of such breach to the Company in accordance with Section 9 below. The Executive acknowledges that he will not be entitled to terminate his employment with the Company for Good Reason solely by reason of (x) the consummation of the transactions contemplated by the Merger Agreement (and any subsequent transactions directly related thereto and contemplated thereby), including his resignation or removal from the board of directors of the Company or any of its subsidiaries, or any change in his reporting responsibilities to reflect the fact that the Company is a subsidiary of NEBS, or (y) any reduction or discontinuation of the Special Incentive Plan referred to in Section 3(b)(ii) after NEBS' fiscal year 2003, or (z) the Company's election not to extend the term of the Change in Control Severance Agreement dated as of September 23, 1999, as amended (the "Change in Control Agreement"), by and between the Company and the Executive, in accordance with the first sentence of Section 1 of the Change in Control Agreement, or the Company's election not to renew or extend the term of this Agreement beyond the original four-year Term. (ii) other than for Good Reason; provided that the Company retains the right to terminate the Executive's employment for Cause at any time during the notice period referred to in Section 5(d) below. (c) Notice of Termination. Any purported termination of the Executive's employment by the Company or by the Executive shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 9 below. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth the facts and circumstances claimed to provide a basis for termination of the Executive's employment. (d) Date of Termination. For purposes of this Agreement, "Date of Termination" shall mean: (i) If the Executive's employment is terminated for Disability, 30 days after the Notice of Termination is given (provided that the Executive shall have been absent from the full-time performance of his duties for at least 6 months and shall not 6 have returned to the full-time performance of his duties during such 30-day period in accordance with Section 5(a)(i) hereof); and (ii) If the Executive's employment is terminated pursuant to Section 5(a)(ii), 5(a)(iii) or 5(b) above or for any other reason (other than Disability), the date specified in the Notice of Termination (which, in the case of a termination pursuant to Section 5(a)(ii) above shall not be less than 10 days, and in the case of a termination pursuant to Section 5(b)(i) above shall not be less than 10 nor more than 30 days, and in the case of a termination pursuant to Section 5(b)(ii) above shall not be less than 60 days, respectively, from the date such Notice of Termination is given). If the Executive delivers a Notice of Termination in connection with an intended termination of employment by the Executive other than for Good Reason, the Company may, in its sole discretion, waive the requirement that the Executive remain employed during the entire notice period, and may fix an earlier date as the Date of Termination, which actions shall not under any circumstances be deemed to be a termination of the Executive's employment by the Company without Cause. (e) Dispute of Termination. If, within 10 days after any Notice of Termination is given, the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be the date on which the dispute is finally determined, either by mutual written agreement of the parties, or by a final judgment, order or decree of a court of competent jurisdiction (which is not appealable or the time for appeal therefrom having expired and no appeal having been perfected); provided, that the Date of Termination shall be extended by a notice of dispute only if such notice is given in good faith and the party giving such notice pursues the resolution of such dispute with reasonable diligence. Notwithstanding the pendency of any such dispute, the Company shall continue to pay the Executive full compensation in effect when the notice giving rise to the dispute was given (including, but not limited to, base salary) and continue the Executive as a participant in all compensation, benefit and insurance plans in which the Executive was participating when the notice giving rise to the dispute was given, until the dispute is finally resolved in accordance with this Section. Amounts paid under this Section 5(e) are in addition to all other amounts due under this Agreement and shall not be offset against or reduce any other amounts under this Agreement. 6. Compensation Upon Termination or During Disability. Upon termination -------------------------------------------------- of the Executive's employment or during a period of Disability, the Executive shall be entitled to the following benefits: (a) During any period that the Executive fails to perform his full-time duties with the Company as a result of Disability, the Company shall pay the Executive his base salary as in effect at the commencement of any such period and the amount of any other form or type of compensation otherwise payable for such period if the Executive were not so disabled, until such time as the Executive is determined to be eligible for long term disability benefits in accordance with the Company's insurance program then in effect or the Executive is terminated for Disability. 7 (b) If the Executive's employment shall be terminated by the Company for Cause or by the Executive other than for Good Reason, then the Company shall pay to the Executive his full base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given and the Company shall have no further obligation to the Executive under this Agreement, except with respect to any benefits to which the Executive is entitled under any Company pension or welfare plan, insurance program or as otherwise required by law. (c) If the Executive's employment shall be terminated by the Company for Disability or by reason of the Executive's death, then the Company shall (i) immediately commence payment to the Executive (or the Executive's designated beneficiaries or estate, if no beneficiary is designated) of any and all benefits to which the Executive is entitled under the Company's retirement and insurance programs then in effect, (ii) immediately pay the Executive (or the executor or administrator of the Executive's estate) for all vacation time earned but not used through the Date of Termination and (iii) pay the Executive (or the executor or administrator of the Executive's estate) the bonus payment in accordance with Section 6(e) below. (d) If the Executive's employment shall be terminated (A) by the Company without Cause (excluding termination for Disability or by reason of the Executive's death), or (B) by the Executive for Good Reason, then notwithstanding such termination, the Executive shall be entitled to the benefits provided below: (i) The Company shall continue to pay the Executive his base salary at the rate in effect immediately prior to the Notice of Termination (or, if higher, at the rate in effect immediately prior to the reduction giving rise to the Executive's termination for Good Reason in accordance with Section 5(b)(i)(B) above) for the remaining term of this Agreement (the "Severance Period"). (ii) The Executive will be paid for all vacation time earned but not used through his Date of Termination, but vacation will not continue to accrue after such date. (iii) During the Severance Period, the Company shall also (A) continue to reimburse the Executive for the vehicle allowance upon the terms and conditions set forth in Section 4(b)(iii) above, and (B) continue to reimburse the Executive for the premium cost of any life or long term disability insurance maintained by the Executive pursuant to this Agreement on substantially the same terms as prior to the Notice of Termination, and (C) if the Executive is eligible for and elects continuation coverage under one or more group health plans sponsored by the Company, and is not otherwise eligible to receive such coverage pursuant to another employer's plan, pay the same portion of the premium cost of such coverage, if any, as is paid by the Company for members of its management team who are actively employed. Except as set forth above, after his Date of Termination the Executive's benefits under any other applicable employee benefit plans will be determined in accordance with the terms of such plans then in effect or as otherwise required by law. 8 (iv) The amount of compensation and benefit payments to the Executive during the Severance Period shall be offset by any compensation or benefit payments by another employer, or by a self proprietorship if the Executive is self employed, to Employee during the Severance Period; provided that there shall be no offset with respect to any compensation or benefit payments derived from the continuation of any business activities in which the Executive was engaged prior to the Date of Termination and which are expressly permitted under Section 2 above. (e) If the Executive's employment shall be terminated (i) by the Company other than for Cause (including termination for Disability or by reason of the Executive's death), or (ii) by the Executive for Good Reason, prior to the end of any fiscal year, then notwithstanding such termination or the terms of any bonus plan to the contrary, the Executive shall be entitled to a bonus if the earnings thresholds for the applicable fiscal year have been achieved as of the last day of the fiscal year in which his termination of employment occurs; provided, however, that the amount of such bonus shall be calculated by multiplying the bonus amount that would have been payable to the Executive, had his employment not terminated during the fiscal year, by a fraction, the numerator of which is the number of full weeks of employment completed by the Executive during such fiscal year and the denominator of which is 52. Notwithstanding the foregoing, if the Executive's employment shall be terminated (A) by the Company without Cause (excluding termination for Disability or by reason of the Employee's death), or (B) by the Executive for Good Reason, then notwithstanding such termination or the terms of any bonus plan to the contrary, the Executive shall be entitled to bonuses under the Special Incentive Plan referred to in Section 3(b)(ii) above with respect to each of the remaining fiscal years of the plan (including the year in which his termination of employment occurs) if the earnings thresholds for each applicable fiscal year have been achieved as of the last day of each such fiscal year; provided that each such bonus payment shall be in the amount that would have been payable to the Executive had his employment not been terminated; and provided, further, that if termination of the Executive's employment under the circumstances described above occurs upon or following a Change in Control, 50% of the Executive's bonus target under the Special Incentive Plan for such remaining years will be guaranteed. If the Executive's employment shall be terminated (A) by the Company for Cause, or (B) by the Executive other than for Good Reason, prior to the end of any fiscal year, then no bonus shall be payable for such year. Any bonus amount payable pursuant to this Section 6(e) shall be paid at the same time bonuses are paid to other senior executives of the Company, and shall be payable in cash. (f) The Company's obligation to make the payments provided by Section 6(d) or (e) is conditioned upon the Executive's execution of a customary release of claims relating to the termination of the Executive's employment with the Company, in favor of the Company, its affiliates, and their respective directors, officers, employees and agents. (g) If the Executive's employment shall be terminated (i) by the Company other than for Cause, or (ii) by the Executive for Good Reason, then (A) any unvested portion 9 of the stock option referred to in Section 4(a) shall automatically vest and become exercisable immediately prior to the Date of Termination, and (B) any unvested restricted shares of NEBS stock awarded in connection with the Special Incentive Plan and then held by the Executive shall thereupon vest in the Executive (or, in the case of death, in the person or persons to whom such shares pass by will or by the laws of descent and distribution), and shall be delivered to the Executive, or to the executor or administrator of his estate, upon satisfaction of all applicable income, employment and other tax withholding obligations. (h) All amounts payable to the Executive hereunder are subject to such income, employment and other tax withholding obligations as are required by applicable law. (i) If the Executive's employment is terminated by the Company without Cause following the term of this Agreement, the Executive shall be entitled to severance benefits consistent with the Company's historical policy and practice with respect to corporate officers. 7. Non-Disclosure of Company Information; Non-Competition. ------------------------------------------------------ (a) The Executive understands that he will have access to confidential and proprietary information of the Company (including its subsidiaries and affiliates) and hereby agrees that he will treat all such information as confidential and proprietary information of the Company (or of such subsidiary or affiliate, as the case may be) and he will not, either directly or indirectly, copy, use or disclose any such confidential or proprietary information which he may either obtain or develop during employment with the Company to any person, firm, company, association or other entity, unless such copying, use or disclosure is for the exclusive benefit of the Company as the Company may direct or he is otherwise required to do so by law. (b) At such time as the Executive's employment with the Company terminates, regardless of the reason, the Executive shall return to the Company any and all confidential and proprietary information of the Company, customer files and all copies of such information, whether stored on paper or electronically, which the Executive may have acquired or developed during his employment with the Company and any other property of the Company, regardless of the confidential or proprietary nature of such property, which the Executive may have in his possession at that time. (c) During the term of this Agreement and while the Executive is employed by the Company, the Executive shall not, directly or indirectly, engage in any business or sales activity or other endeavor which competes with the business of the Company, whether as an employee, agent, independent contractor, consultant, advisor, director, owner (except as a holder of not more than 1% of the outstanding stock of a publicly-traded company) or sole proprietor of another organization or entity. In addition, for a period of one (1) year following the termination of the Executive's employment with the Company for Cause by the Company or for any reason by the Executive other than for Good Reason, the Executive shall not, directly or indirectly, anywhere within the United States, Canada and such other countries in which the Company conducts business during 10 his employment, own (except as a holder of not more than 1% of the outstanding stock of a publicly-traded company), manage, operate, control, be employed by, render services to, participate in or be connected in any manner with any business which is competitive to the Company's business, including, without limitation, any business which buys, sells, manufactures, distributes, markets or promotes (i) apparel products to golf sports shops and to promotional products/advertising specialty industry customers or (ii) personalized apparel products targeted to small businesses for professional image, promotional or advertising specialty uses, it being recognized that if the Executive is terminated by the Company other than for Cause or by the Executive for Good Reason, the restrictions of this Section 7(c) shall not apply after the termination of his employment. Nothing in this Section 7(c) shall prevent the Executive from continuing his current and future investment and activities in Future Products, Inc. ("Future Products") provided that the business of Future Products is limited to contract sewing and not sales or marketing of apparel products that compete with the products of the Company, unless approved in advance by the Company. (d) For a period ending on the later of (i) one (1) year following termination of the Executive's employment with the Company or (ii) June 30, 2004, if the Executive's employment with the Company is terminated for Cause by the Company or for any reason by the Executive, then the Executive agrees that he will not, either directly or indirectly, solicit, hire, employ, retain or otherwise contact any employee of the Company, any independent contractor or sales representative of the Company or any person who has been an employee of the Company during the one-year period prior to the termination of the Executive's employment with the Company, nor assist any other person or entity to solicit or hire any such individual. (e) The Executive acknowledges that the restrictions set forth in this Section 7 are reasonably necessary to protect a legitimate business interest of the Company and that the Company has no adequate remedy at law for any breach of the provisions of this Section 7 by the Executive and that such breach will result in irreparable harm to the Company. Accordingly, in the event of the breach by the Executive of any of the provisions of this Section 7, the Company will have no further obligations to him under this Agreement, including without limitation the payments described in Section 6(d) and (e) above, and in addition and supplementary to any other rights and remedies existing in its favor, the Company shall be entitled to seek specific performance and/or injunctive or other relief in order to enforce or prevent any violation of the provisions hereof. 8. Successors; Binding Agreement. ----------------------------- (a) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to 51% or more of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to the compensation and benefits from the Company in the same amount and on the same terms as he would be entitled hereunder if 11 he terminated his employment for Good Reason, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. (b) This Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, successors, heirs, and designated beneficiaries. If the Executive should die while any amount would still be payable to the Executive hereunder if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive's designated beneficiaries, or, if there is no such designated beneficiary, to the Executive's estate. 9. Notice. For the purposes of this Agreement, notices and all other ------ communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed to the last known residence address of the Executive or in the case of the Company, to its principal office to the attention of at least one of the directors of the Company, with a copy to NEBS, 500 Main Street, Groton, MA 01471, Attention: President (provided that notice to the Company shall not be effective unless a copy of such notice is delivered to NEBS as aforesaid), or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. 10. Miscellaneous. No provision of this Agreement may be modified, waived ------------- or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the parties. No waiver by either party hereto at any time of any breach by the other party to this Agreement of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or similar time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Minnesota. Each of the parties consents to personal jurisdiction in any action brought in any court, federal or state, of competent jurisdiction within the State of Minnesota, waives any argument that such a forum is not convenient, and agrees that any litigation or arbitration relating to this Agreement shall be venued in Hennepin County, Minnesota. Notwithstanding anything herein to the contrary, this Agreement is intended to supersede the Employment Agreement dated as of March 25, 1999 (the "3/25/99 Employment Agreement") by and between the Company and the Executive; provided, however, that if the Merger Agreement is terminated for any reason prior to the occurrence of the Merger, then this Agreement shall automatically be deemed to have been terminated and cancelled, without any further liability of either party or of NEBS to each other, and the 3/25/99 Employment Agreement shall automatically be reinstated and thereafter shall remain in full force and effect. 12 11. Severability. Any term or provision of this Agreement that is invalid ------------ or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. If the final judgment of a court of competent jurisdiction declares that any term or provision hereof is invalid or unenforceable, the parties agree that the court making the determination of invalidity or unenforceability shall have the power to reduce the scope, duration or area of the term or provision, to delete specific words or phrases or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified after the expiration of the time within which the judgment may be appealed. [Signature Page Follows] 13 IN WITNESS WHEREOF, the undersigned officer, on behalf of PremiumWear, Inc., and the Executive have hereunto set their hands as of the date first above written. PREMIUMWEAR, INC. By: /s/ David E. Berg --------------------------- Its Chief Executive Officer EXECUTIVE: /s/ Timothy C. Klouda --------------------------- Timothy C. Klouda 14 EX-99.4E 8 0008.txt EMPLOYMENT AGREEMENT-DENNIS LENZ EXHIBIT 99.4(e) EMPLOYMENT AGREEMENT THIS AGREEMENT is made and entered into by and between PremiumWear, Inc., a Delaware corporation with its principal offices at 5500 Feltl Road, Minnetonka, Minnesota (the "Company"), and Dennis G. Lenz, residing at Minnetonka, Minnesota (the "Executive"), and shall be effective as of this 26th day of May, 2000. WHEREAS, pursuant to an Agreement and Plan of Merger dated as of May 26, 2000 (the "Merger Agreement"), by and among New England Business Service, Inc., a Delaware corporation ("NEBS"), Penguin Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of NEBS ("Sub"), and the Company, Sub will offer to purchase shares of the Company's common stock pursuant to a tender offer, and upon successful completion of the tender offer, will thereafter be merged with and into the Company (the "Merger"), with the Company being the surviving corporation in the Merger and a wholly-owned subsidiary of NEBS; and WHEREAS, the Company desires to secure the continuation of the Executive's services as Executive Vice President of the Promotional Products Division following the Merger, and the Executive desires to perform such services for the Company, on the terms and conditions as set forth herein; NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements of the parties herein contained, the parties hereto agree as follows: 1. Term. This Agreement shall be effective from and after the date hereof ---- and shall continue in effect through June 30, 2004 (the "Term"). The Company, NEBS and the Executive shall meet in the first thirty (30) days of the fourth year of the Term to discuss whether this Agreement should be renewed or extended beyond the original four-year Term. Except as expressly provided herein, this Agreement shall neither impose nor confer any further rights or obligations on the Company or the Executive on the day after the end of the term of this Agreement. Expiration of the term of this Agreement of itself and without subsequent action by the Company or the Executive shall not end the employment relationship between the Company and the Executive. 2. Duties. The Executive is engaged to and shall render services in the ------ position ofExecutive Vice President of the Promotional Products Division. In this regard, the Executive shall perform such services as are appropriate to that position and such other services that are assigned to him from time to time by such person as the Board of Directors may designate from time to time (the "Designated Person"). The Executive will devote his full time, attention and skill to the business and affairs of the Company during normal working hours, and will use his best efforts to advance the Company's interests, and will not engage in outside business activities, except for managing passive investments, serving on other corporate, civic or charitable boards or committees and continuing his current and future investment and activities in Future Products, Inc. (subject to the limitations set forth in Section 7(c) below), provided that such permitted 1 outside business activities do not significantly interfere with the performance of his duties hereunder. 3. Compensation. ------------ (a) Base Salary. During the term of the Executive's employment hereunder, the Company will pay to the Executive an annual base salary of $240,000, such salary to be paid in conformity with the Company's policies relating to salaried employees. The Executive's base salary will be subject to annual review and may be increased, but not decreased, by the Company's Board of Directors, based on the recommendation of the Designated Person. (b) Bonus. The Executive will be eligible for the following incentive bonuses following the Merger: (i) The Executive will participate in an Annual Executive Bonus Plan, beginning with NEBS' fiscal year 2001, with a bonus target equal to 50% of base salary. Payments will be determined against financial and personal objectives established by NEBS' Board of Directors and the Designated Person at the beginning of each fiscal year, which objectives will include Company- specific objectives, as well as NEBS' overall corporate objectives; provided, however, that 50% of the Executive's bonus target for fiscal 2001 will be guaranteed, and all payments to the Executive under the Annual Executive Bonus Plan with respect to NEBS' fiscal years 2001 through 2004 will be paid in cash within 60 days following the end of the applicable fiscal year. The financial objectives established for the Annual Executive Bonus Plan for fiscal year 2001 that will be applicable to the Executive are set forth in Attachment A hereto. (ii) The Company will establish a Special Incentive Plan which will be in effect for NEBS' fiscal years 2001 through 2003, and the Executive will participate in this plan with an annual bonus target equal to $125,000. Payments will be determined against specific sales and earnings objectives for the Company, which objectives are set forth in Attachment B hereto; provided, however, that upon the occurrence of a Change in Control (as defined below), 50% of the Executive's bonus target for the remaining fiscal years of the plan (including the year in which the Change in Control occurs) will be guaranteed; provided, further, however, that the foregoing guarantee will not apply with respect to any fiscal year in which the Executive's employment is terminated (A) by the Company for Cause (as hereinafter defined) or (B) by the Executive other than for Good Reason (as hereinafter defined), or for subsequent fiscal years. For purposes of this Agreement, "Change in Control" has the same meaning, and is subject to the same limitations, as set forth in Section 2 of the First Amendment to Change in Control Severance Agreement dated as of May 26, 2000 by and between the Company and the Executive. Payments under the Special Incentive Plan will be made within 60 days following the end of the applicable fiscal year and will be in the form of restricted shares of NEBS common stock in lieu of cash, under NEBS' Stock Compensation 2 Plan, and such shares will vest six months following the end of the applicable fiscal year with respect to each respective award. Restricted share awards will be subject to the terms and conditions of restricted stock award agreements substantially in the form of Attachment C hereto. With respect to each award, if the aggregate fair market value of the awarded shares on the vesting date is less than the fair market value of such shares on the date of grant, then the Company will pay such difference to the Executive in cash within 10 days of the applicable vesting date. (iii) Upon the effective date of the Merger, the Executive's participation in the Company's 2000 Bonus Plan (the "2000 Bonus Plan") will cease; provided, however, that, within 60 days following the Merger, the Company will pay the Executive the pro-rated amount of the bonus for which the Executive was otherwise eligible under the 2000 Bonus Plan (assuming for these purposes that the plan permits pro-rated payouts) with respect to the period from January 2, 2000 through the effective date of the Merger. 4. Additional Benefits. ------------------- (a) Stock Options. Following the Merger, the Executive will be granted an option to purchase 20,000 shares of NEBS common stock. The portion of the option that vests on the date of grant will, to the extent permitted by applicable law, be granted in the form of incentive stock options, and such portion as qualifies for incentive stock option status will be granted under the NEBS 1997 Key Employee and Eligible Director Stock Option and Stock Appreciation Rights Plan (the "1997 Plan"); the remaining portion of the option will be granted on terms substantially similar to the 1997 Plan and will be in the form of options that do not qualify as incentive stock options. The exercise price for such option will be the fair market value of NEBS common stock on the date of grant, as determined in accordance with the 1997 Plan. The option will vest as to 25% of the option shares on the date of grant, and as to an additional 25% per year on each of the first three anniversaries of the date of grant, and will have a maximum term of ten years, subject to earlier termination in accordance with the terms of the 1997 Plan. (b) Other Benefits. (i) The Executive will be entitled to and will receive such other employee benefits, such as 401(k), hospitalization, medical, life and other insurance benefits, vacation, sick pay and short-term and long-term disability that are now being maintained by the Company for the benefit of senior executives, subject to the terms, conditions, and overall administration of such benefits and to the right of the Company to hereafter change the level of such benefits as part of a general change in policy affecting senior executives of the Company generally; provided that any action by the Company which would directly or indirectly materially reduce any of such benefits and which remains uncured after 30 days following the delivery of the Executive's written notice of such breach to the Company in accordance with Section 9 below will entitle the Executive to terminate his employment hereunder for Good Reason (as defined below); and provided, further, that so long as the Company does not reduce its portion (in either dollars or percentage of total premium cost) of the 3 Executive's premium cost for the group health plans in which the Executive participates, any increase in the Executive's co-payment amount for such premiums shall not be deemed to be a reduction in the Executive's benefits provided by this Section. (ii) The Company will promptly pay (or reimburse the Executive for) all reasonable business expenses incurred by him in the performance of his duties hereunder in accordance with policies from time to time adopted by the Board of Directors or by NEBS, including business travel and entertainment expenses. The Executive shall furnish to the Company such receipts and records as the Company may require to verify the foregoing expenses. (iii) The Company shall pay the Executive a vehicle allowance of up to $7,200 per year upon presentment of a monthly vehicle expense report or similar reimbursement request prepared by the Executive evidencing such vehicle expenses. If the Executive's employment with the Company terminates and the Company is not required to pay severance pursuant to Section 6(d), the Executive shall reimburse the Company for any vehicle lease payments the Company will become obligated to pay and actually pays under those vehicle leases which are in the name of Klouda-Lenz, Inc. and relate to a vehicle used by the Executive while employed by the Company pursuant to this Agreement. (iv) The Company understands that as of January 4, 1999, the Executive owned a $2,000,000 annuity. During the period of the Executive's employment with the Company hereunder, and promptly upon receipt from the Executive of evidence of a premium payment for such annuity, the Company shall reimburse the Executive for the premiums necessary to fund $1,000,000 of such annuity, up to a maximum of $18,000 per year. Such annuity shall remain the sole and exclusive property of the Executive at all times. 5. Termination of Employment. ------------------------- (a) Termination by the Company. The Company may terminate the Executive's employment with the Company hereunder at any time: (i) upon the death or Disability (as hereinafter defined) of the Executive. For purposes of this Agreement, "Disability" shall be deemed the reason for the Company's termination of the Executive's employment with the Company if, as a result of the Executive's incapacity due to mental or physical disability, the Executive is absent from the full-time performance of his duties with the Company for at least 6 consecutive months, and within 30 days after written Notice of Termination (as defined below) is given the Executive shall not have returned to the full-time performance of his duties. Any question as to the existence of the Executive's Disability upon which the Executive and the Company cannot agree shall be determined by a qualified independent physician selected by the Executive (or, if the Executive is unable to make such selection, it shall be made by any adult member of the Executive's immediate family), and reasonably approved by the Company. The 4 determination of such physician made in writing to the Company and to the Executive shall be final and conclusive for all purposes of this Agreement, absent fraud. (ii) for Cause. For purpose of this Agreement, "Cause" shall mean (A) the willful and continued failure by the Executive (other than any such failure resulting from (1) the Executive's incapacity due to physical or mental illness or death, (2) any such actual or anticipated failure after the issuance of a Notice of Termination by the Executive for Good Reason, or (3) the Company's active or passive obstruction of the performance of the Executive's duties and responsibilities) to perform substantially the duties and responsibilities of the Executive's position with the Company after a written demand for substantial performance, signed by a majority of the Company's Board of Directors, is delivered to the Executive, which demand specifically identifies the manner in which the directors believe that the Executive has not substantially performed his duties or responsibilities; (B) the conviction of the Executive by a court of competent jurisdiction for felony criminal conduct; (C) the willful engaging by the Executive in fraud or dishonesty which is demonstrably and materially injurious to the Company or its reputation, monetarily or otherwise; (D) the Executive's violation of Section 7 of this Agreement (other than violations of Section 7(a) that are both inadvertent and immaterial); or (E) a material breach involving fraud or bad faith by the Executive of the terms, conditions, representations or warranties of the Agreement and Plan of Merger, dated March 25, 1999, by and among the Company, the Executive and the other parties named therein (the "Klouda-Lenz Merger Agreement") which breach has not been cured by the Executive within 30 days of the Company's written notice to the Executive of such breach. No act, or failure to act, on the Executive's part shall be deemed "willful" unless committed, or omitted by the Executive in bad faith and without a reasonable belief that the Executive's act or failure to act was in the best interest of the Company. The Executive shall not be terminated for Cause unless and until the Company shall have delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of NEBS' Board of Directors at a meeting of said Board called and held for such purpose (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive's counsel, to be heard by said Board), finding that, in the good faith opinion of said Board, the Executive's conduct was Cause and specifying the particulars thereof in detail. (iii) without Cause, provided that in such case the Executive shall be entitled to the benefits set forth in Section 6(d) and (e) below. (b) Termination by the Executive. The Executive may terminate his employment with the Company hereunder at any time: (i) for Good Reason. "Good Reason" shall mean, without the Executive's express written consent, any of the following: (A) the assignment to the Executive of any duties inconsistent with the Executive's status or position with the Company, or a substantial alteration in the nature or status of the Executive's responsibilities from those in effect immediately prior to the Merger; (B) a reduction by the Company in 5 the Executive's annual base salary or bonus targets; (C) (1) the relocation of the Company's principal executive offices to a location more than 50 miles from Minnetonka, Minnesota; or (2) the Company requiring the Executive to be based anywhere other than the Company's principal executive offices except for required travel on the Company's business to the extent reasonably consistent with the Company's strategic business plan, and except to the extent for travel in connection with the Executive's management reporting, planning and training responsibilities to NEBS; (D) the taking of any action by the Company which would directly or indirectly materially reduce any of the other benefits described in Section 4(b) and which remains uncured after 30 days following the delivery of the Executive's written notice of such breach to the Company in accordance with Section 9 below; or (E) any material violation of this Agreement by the Company which remains uncured after 30 days following the delivery of the Executive's written notice of such breach to the Company in accordance with Section 9 below. The Executive acknowledges that he will not be entitled to terminate his employment with the Company for Good Reason solely by reason of (x) the consummation of the transactions contemplated by the Merger Agreement (and any subsequent transactions directly related thereto and contemplated thereby), including his resignation or removal from the board of directors of the Company or any of its subsidiaries, or any change in his reporting responsibilities to reflect the fact that the Company is a subsidiary of NEBS, or (y) any reduction or discontinuation of the Special Incentive Plan referred to in Section 3(b)(ii) after NEBS' fiscal year 2003, or (z) the Company's election not to extend the term of the Change in Control Severance Agreement dated as of September 23, 1999, as amended (the "Change in Control Agreement"), by and between the Company and the Executive, in accordance with the first sentence of Section 1 of the Change in Control Agreement, or the Company's election not to renew or extend the term of this Agreement beyond the original four-year Term. (ii) other than for Good Reason; provided that the Company retains the right to terminate the Executive's employment for Cause at any time during the notice period referred to in Section 5(d) below. (c) Notice of Termination. Any purported termination of the Executive's employment by the Company or by the Executive shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 9 below. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth the facts and circumstances claimed to provide a basis for termination of the Executive's employment. (d) Date of Termination. For purposes of this Agreement, "Date of Termination" shall mean: (i) If the Executive's employment is terminated for Disability, 30 days after the Notice of Termination is given (provided that the Executive shall have been absent from the full-time performance of his duties for at least 6 months and shall not 6 have returned to the full-time performance of his duties during such 30-day period in accordance with Section 5(a)(i) hereof); and (ii) If the Executive's employment is terminated pursuant to Section 5(a)(ii), 5(a)(iii) or 5(b) above or for any other reason (other than Disability), the date specified in the Notice of Termination (which, in the case of a termination pursuant to Section 5(a)(ii) above shall not be less than 10 days, and in the case of a termination pursuant to Section 5(b)(i) above shall not be less than 10 nor more than 30 days, and in the case of a termination pursuant to Section 5(b)(ii) above shall not be less than 60 days, respectively, from the date such Notice of Termination is given). If the Executive delivers a Notice of Termination in connection with an intended termination of employment by the Executive other than for Good Reason, the Company may, in its sole discretion, waive the requirement that the Executive remain employed during the entire notice period, and may fix an earlier date as the Date of Termination, which actions shall not under any circumstances be deemed to be a termination of the Executive's employment by the Company without Cause. (e) Dispute of Termination. If, within 10 days after any Notice of Termination is given, the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be the date on which the dispute is finally determined, either by mutual written agreement of the parties, or by a final judgment, order or decree of a court of competent jurisdiction (which is not appealable or the time for appeal therefrom having expired and no appeal having been perfected); provided, that the Date of Termination shall be extended by a notice of dispute only if such notice is given in good faith and the party giving such notice pursues the resolution of such dispute with reasonable diligence. Notwithstanding the pendency of any such dispute, the Company shall continue to pay the Executive full compensation in effect when the notice giving rise to the dispute was given (including, but not limited to, base salary) and continue the Executive as a participant in all compensation, benefit and insurance plans in which the Executive was participating when the notice giving rise to the dispute was given, until the dispute is finally resolved in accordance with this Section. Amounts paid under this Section 5(e) are in addition to all other amounts due under this Agreement and shall not be offset against or reduce any other amounts under this Agreement. 6. Compensation Upon Termination or During Disability. Upon termination -------------------------------------------------- of the Executive's employment or during a period of Disability, the Executive shall be entitled to the following benefits: (a) During any period that the Executive fails to perform his full-time duties with the Company as a result of Disability, the Company shall pay the Executive his base salary as in effect at the commencement of any such period and the amount of any other form or type of compensation otherwise payable for such period if the Executive were not so disabled, until such time as the Executive is determined to be eligible for long term disability benefits in accordance with the Company's insurance program then in effect or the Executive is terminated for Disability. 7 (b) If the Executive's employment shall be terminated by the Company for Cause or by the Executive other than for Good Reason, then the Company shall pay to the Executive his full base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given and the Company shall have no further obligation to the Executive under this Agreement, except with respect to any benefits to which the Executive is entitled under any Company pension or welfare plan, insurance program or as otherwise required by law. (c) If the Executive's employment shall be terminated by the Company for Disability or by reason of the Executive's death, then the Company shall (i) immediately commence payment to the Executive (or the Executive's designated beneficiaries or estate, if no beneficiary is designated) of any and all benefits to which the Executive is entitled under the Company's retirement and insurance programs then in effect, (ii) immediately pay the Executive (or the executor or administrator of the Executive's estate) for all vacation time earned but not used through the Date of Termination and (iii) pay the Executive (or the executor or administrator of the Executive's estate) the bonus payment in accordance with Section 6(e) below. (d) If the Executive's employment shall be terminated (A) by the Company without Cause (excluding termination for Disability or by reason of the Executive's death), or (B) by the Executive for Good Reason, then notwithstanding such termination, the Executive shall be entitled to the benefits provided below: (i) The Company shall continue to pay the Executive his base salary at the rate in effect immediately prior to the Notice of Termination (or, if higher, at the rate in effect immediately prior to the reduction giving rise to the Executive's termination for Good Reason in accordance with Section 5(b)(i)(B) above) for the remaining term of this Agreement (the "Severance Period"). (ii) The Executive will be paid for all vacation time earned but not used through his Date of Termination, but vacation will not continue to accrue after such date. (iii) During the Severance Period, the Company shall also (A) continue to reimburse the Executive for the vehicle allowance upon the terms and conditions set forth in Section 4(b)(iii) above, and (B) continue to reimburse the Executive for the premium cost of any life or long term disability insurance maintained by the Executive pursuant to this Agreement on substantially the same terms as prior to the Notice of Termination, and (C) if the Executive is eligible for and elects continuation coverage under one or more group health plans sponsored by the Company, and is not otherwise eligible to receive such coverage pursuant to another employer's plan, pay the same portion of the premium cost of such coverage, if any, as is paid by the Company for members of its management team who are actively employed. Except as set forth above, after his Date of Termination the Executive's benefits under any other applicable employee benefit plans will be determined in accordance with the terms of such plans then in effect or as otherwise required by law. 8 (iv) The amount of compensation and benefit payments to the Executive during the Severance Period shall be offset by any compensation or benefit payments by another employer, or by a self proprietorship if the Executive is self employed, to Employee during the Severance Period; provided that there shall be no offset with respect to any compensation or benefit payments derived from the continuation of any business activities in which the Executive was engaged prior to the Date of Termination and which are expressly permitted under Section 2 above. (e) If the Executive's employment shall be terminated (i) by the Company other than for Cause (including termination for Disability or by reason of the Executive's death), or (ii) by the Executive for Good Reason, prior to the end of any fiscal year, then notwithstanding such termination or the terms of any bonus plan to the contrary, the Executive shall be entitled to a bonus if the earnings thresholds for the applicable fiscal year have been achieved as of the last day of the fiscal year in which his termination of employment occurs; provided, however, that the amount of such bonus shall be calculated by multiplying the bonus amount that would have been payable to the Executive, had his employment not terminated during the fiscal year, by a fraction, the numerator of which is the number of full weeks of employment completed by the Executive during such fiscal year and the denominator of which is 52. Notwithstanding the foregoing, if the Executive's employment shall be terminated (A) by the Company without Cause (excluding termination for Disability or by reason of the Employee's death), or (B) by the Executive for Good Reason, then notwithstanding such termination or the terms of any bonus plan to the contrary, the Executive shall be entitled to bonuses under the Special Incentive Plan referred to in Section 3(b)(ii) above with respect to each of the remaining fiscal years of the plan (including the year in which his termination of employment occurs) if the earnings thresholds for each applicable fiscal year have been achieved as of the last day of each such fiscal year; provided that each such bonus payment shall be in the amount that would have been payable to the Executive had his employment not been terminated; and provided, further, that if termination of the Executive's employment under the circumstances described above occurs upon or following a Change in Control, 50% of the Executive's bonus target under the Special Incentive Plan for such remaining years will be guaranteed. If the Executive's employment shall be terminated (A) by the Company for Cause, or (B) by the Executive other than for Good Reason, prior to the end of any fiscal year, then no bonus shall be payable for such year. Any bonus amount payable pursuant to this Section 6(e) shall be paid at the same time bonuses are paid to other senior executives of the Company, and shall be payable in cash. (f) The Company's obligation to make the payments provided by Section 6(d) or (e) is conditioned upon the Executive's execution of a customary release of claims relating to the termination of the Executive's employment with the Company, in favor of the Company, its affiliates, and their respective directors, officers, employees and agents. (g) If the Executive's employment shall be terminated (i) by the Company other than for Cause, or (ii) by the Executive for Good Reason, then (A) any unvested portion 9 of the stock option referred to in Section 4(a) shall automatically vest and become exercisable immediately prior to the Date of Termination, and (B) any unvested restricted shares of NEBS stock awarded in connection with the Special Incentive Plan and then held by the Executive shall thereupon vest in the Executive (or, in the case of death, in the person or persons to whom such shares pass by will or by the laws of descent and distribution), and shall be delivered to the Executive, or to the executor or administrator of his estate, upon satisfaction of all applicable income, employment and other tax withholding obligations. (h) All amounts payable to the Executive hereunder are subject to such income, employment and other tax withholding obligations as are required by applicable law. (i) If the Executive's employment is terminated by the Company without Cause following the term of this Agreement, the Executive shall be entitled to severance benefits consistent with the Company's historical policy and practice with respect to corporate officers. 7. Non-Disclosure of Company Information; Non-Competition. ------------------------------------------------------ (a) The Executive understands that he will have access to confidential and proprietary information of the Company (including its subsidiaries and affiliates) and hereby agrees that he will treat all such information as confidential and proprietary information of the Company (or of such subsidiary or affiliate, as the case may be) and he will not, either directly or indirectly, copy, use or disclose any such confidential or proprietary information which he may either obtain or develop during employment with the Company to any person, firm, company, association or other entity, unless such copying, use or disclosure is for the exclusive benefit of the Company as the Company may direct or he is otherwise required to do so by law. (b) At such time as the Executive's employment with the Company terminates, regardless of the reason, the Executive shall return to the Company any and all confidential and proprietary information of the Company, customer files and all copies of such information, whether stored on paper or electronically, which the Executive may have acquired or developed during his employment with the Company and any other property of the Company, regardless of the confidential or proprietary nature of such property, which the Executive may have in his possession at that time. (c) During the term of this Agreement and while the Executive is employed by the Company, the Executive shall not, directly or indirectly, engage in any business or sales activity or other endeavor which competes with the business of the Company, whether as an employee, agent, independent contractor, consultant, advisor, director, owner (except as a holder of not more than 1% of the outstanding stock of a publicly-traded company) or sole proprietor of another organization or entity. In addition, for a period of one (1) year following the termination of the Executive's employment with the Company for Cause by the Company or for any reason by the Executive other than for Good Reason, the Executive shall not, directly or indirectly, anywhere within the United States, Canada and such other countries in which the Company conducts business during 10 his employment, own (except as the holder of not more than 1% of the outstanding stock of a publicly-traded company), manage, operate, control, be employed by, render services to, participate in or be connected in any manner with any business which is competitive to the Company's business, including, without limitation, any business which buys, sells, manufactures, distributes, markets or promotes (i) apparel products to golf sports shops and to promotional products/advertising specialty industry customers or (ii) personalized apparel products targeted to small businesses for professional image, promotional or advertising specialty uses, it being recognized that if the Executive is terminated by the Company other than for Cause or by the Executive for Good Reason, the restrictions of this Section 7(c) shall not apply after the termination of his employment. Nothing in this Section 7(c) shall prevent the Executive from continuing his current and future investment and activities in Future Products, Inc. ("Future Products") provided that the business of Future Products is limited to contract sewing and not sales or marketing of apparel products that compete with the products of the Company, unless approved in advance by the Company. (d) For a period ending on the later of (i) one (1) year following termination of the Executive's employment with the Company or (ii) June 30, 2004, if the Executive's employment with the Company is terminated for Cause by the Company or for any reason by the Executive, then the Executive agrees that he will not, either directly or indirectly, solicit, hire, employ, retain or otherwise contact any employee of the Company, any independent contractor or sales representative of the Company or any person who has been an employee of the Company during the one-year period prior to the termination of the Executive's employment with the Company, nor assist any other person or entity to solicit or hire any such individual. (e) The Executive acknowledges that the restrictions set forth in this Section 7 are reasonably necessary to protect a legitimate business interest of the Company and that the Company has no adequate remedy at law for any breach of the provisions of this Section 7 by the Executive and that such breach will result in irreparable harm to the Company. Accordingly, in the event of the breach by the Executive of any of the provisions of this Section 7, the Company will have no further obligations to him under this Agreement, including without limitation the payments described in Section 6(d) and (e) above, and in addition and supplementary to any other rights and remedies existing in its favor, the Company shall be entitled to seek specific performance and/or injunctive or other relief in order to enforce or prevent any violation of the provisions hereof. 8. Successors; Binding Agreement. ----------------------------- (a) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to 51% or more of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to the compensation and benefits from the Company in the same amount and on the same terms as he would be entitled hereunder if 11 he terminated his employment for Good Reason, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. (b) This Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, successors, heirs, and designated beneficiaries. If the Executive should die while any amount would still be payable to the Executive hereunder if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive's designated beneficiaries, or, if there is no such designated beneficiary, to the Executive's estate. 9. Notice. For the purposes of this Agreement, notices and all other ------ communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed to the last known residence address of the Executive or in the case of the Company, to its principal office to the attention of at least one of the directors of the Company, with a copy to NEBS, 500 Main Street, Groton, MA 01471, Attention: President (provided that notice to the Company shall not be effective unless a copy of such notice is delivered to NEBS as aforesaid), or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. 10. Miscellaneous. No provision of this Agreement may be modified, waived ------------- or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the parties. No waiver by either party hereto at any time of any breach by the other party to this Agreement of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or similar time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Minnesota. Each of the parties consents to personal jurisdiction in any action brought in any court, federal or state, of competent jurisdiction within the State of Minnesota, waives any argument that such a forum is not convenient, and agrees that any litigation or arbitration relating to this Agreement shall be venued in Hennepin County, Minnesota. Notwithstanding anything herein to the contrary, this Agreement is intended to supersede the Employment Agreement dated as of March 25, 1999 (the "3/25/99 Employment Agreement") by and between the Company and the Executive; provided, however, that if the Merger Agreement is terminated for any reason prior to the occurrence of the Merger, then this Agreement shall automatically be deemed to have been terminated and cancelled, without any further liability of either party or of NEBS to each other, and the 3/25/99 Employment Agreement shall automatically be reinstated and thereafter shall remain in full force and effect. 12 11. Severability. Any term or provision of this Agreement that is invalid ------------ or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. If the final judgment of a court of competent jurisdiction declares that any term or provision hereof is invalid or unenforceable, the parties agree that the court making the determination of invalidity or unenforceability shall have the power to reduce the scope, duration or area of the term or provision, to delete specific words or phrases or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified after the expiration of the time within which the judgment may be appealed. [Signature Page Follows] 13 IN WITNESS WHEREOF, the undersigned officer, on behalf of PremiumWear, Inc., and the Executive have hereunto set their hands as of the date first above written. PREMIUMWEAR, INC. By: /s/ David E. Berg ---------------------------- Its Chief Executive Officer EXECUTIVE: /s/ Dennis G. Lenz ---------------------------- Dennis G. Lenz 14 EX-99.5A 9 0009.txt 1ST AMEND. TO CHANGE IN CONTROL-DAVID BERG EXHIBIT 99.5(a) FIRST AMENDMENT TO AMENDED AND RESTATED CHANGE IN CONTROL SEVERANCE AGREEMENT THIS FIRST AMENDMENT TO AMENDED AND RESTATED CHANGE IN CONTROL SEVERANCE AGREEMENT (this "First Amendment") is made and entered to by and between PremiumWear, Inc., a Delaware corporation with its principal offices at 5500 Feltl Road, Minnetonka, Minnesota (the "Company"), and David E. Berg, residing at Edina, Minnesota (the "Executive"), and shall be effective as of this 26th day of May, 2000. WHEREAS, the Company and the Executive are parties to an Amended and Restated Change in Control Severance Agreement dated as of May 22, 2000 (the "Change in Control Agreement"), pursuant to which the Executive is entitled to certain benefits in the event of a termination of his employment with the Company following a "Change in Control" (as defined in the Change in Control Agreement"); and WHEREAS, pursuant to an Agreement and Plan of Merger dated as of May 26, 2000 (the "Merger Agreement"), by and among New England Business Service, Inc., a Delaware corporation ("NEBS"), Penguin Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of NEBS ("Sub"), and the Company, Sub will offer to purchase shares of the Company's common stock pursuant to a tender offer, and upon successful completion of the tender offer, will thereafter be merged with and into the Company (the "Merger"), with the Company being the surviving corporation in the Merger and a wholly-owned subsidiary of NEBS; and WHEREAS, the Company desires to secure the continuation of the Executive's services as President and Chief Executive Officer following the Merger, and the Executive desires to perform such services for the Company, and to that end the Company and the Executive have entered into an Employment Agreement of even date herewith (the "Employment Agreement"); and WHEREAS, in order to induce the Company to enter into the Employment Agreement, the Company and the Executive desire to amend the Change in Control Agreement to provide, among other things, that the consummation of the transactions contemplated by the Merger Agreement will not constitute a "Change in Control" under the terms of the Change in Control Agreement; and WHEREAS, capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Change in Control Agreement; THEREFORE, in consideration of the foregoing and other respective covenants and agreements of the parties herein contained, the parties hereto agree as follows: 1 1. The Executive hereby agrees that the consummation of the transactions contemplated by the Merger Agreement (and any subsequent transactions directly related thereto and contemplated thereby) will not constitute a "Change in Control" for purposes of the Change in Control Agreement. 2. The first sentence of Section 1 of the Change in Control Agreement is hereby amended by deleting the reference to "December 31, 2001", and substituting "June 30, 2003" therefor, and by deleting the reference to "January 1, 2001", and substituting "January 1, 2003" therefor. 3. Section 2 of the Change in Control Agreement is hereby deleted in its entirety and the following substituted therefor, such amendment to be effective from and after the effective time of the Merger: "2. Change in Control. No benefits shall be payable hereunder unless ----------------- there shall have been a Change in Control. For purposes of this Agreement, a "Change in Control" shall mean: "(a) Following the Merger, the Company (i) ceases to be a direct or indirect subsidiary of NEBS, or (ii) sells or otherwise disposes of all or substantially all of its assets or business to any "person" (as such term is defined in Section 3(a)(9) and as used in Section 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), being hereinafter referred to as a "Person") other than NEBS or one of its affiliates; or "(b) The acquisition by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of either (i) the then outstanding shares of NEBS common stock or (ii) the combined voting power of NEBS' outstanding securities ordinarily having the right to vote at elections of directors ("Outstanding NEBS Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from NEBS (excluding an acquisition by virtue of the exercise of a conversion privilege); (B) any acquisition by NEBS or by any corporation controlled by NEBS; (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by NEBS or any corporation controlled by NEBS; or (D) any acquisition by any corporation pursuant to a consolidation or merger if, following such consolidation or merger, the conditions described in clauses (i), (ii) and (iii) of Section 2(d) below are satisfied; or "(c) Individuals who, as of the date hereof, constitute the NEBS Board of Directors (the "NEBS Incumbent Board") ceasing for any reason to constitute at least a majority of the NEBS Board of Directors; provided, however, that any individual becoming a NEBS director (other than a director designated by a Person who has entered into an agreement with the Company to effect a transaction described in Sections 2(b) or (d)) subsequent to the date hereof whose election, or nomination for election by NEBS' stockholders, was approved by a vote or resolution of at least a majority of the directors then comprising the NEBS 2 Incumbent Board shall be considered as though such individual were a member of the NEBS Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened solicitation in opposition (as such terms are used in Rule 14a-6 of Regulation 14A promulgated under the Exchange Act) to the election of directors conducted or to be conducted by or on behalf of a Person other than the NEBS Board of Directors; or "(d) Adoption by the NEBS Board of Directors of a resolution approving an agreement of consolidation of NEBS with or merger of NEBS into another corporation or business entity in each case, unless, following such consolidation or merger, (i) more than 60% of, respectively, the then outstanding shares of common stock of the corporation resulting from such consolidation or merger and/or the combined voting power of the then outstanding voting securities of such corporation or business entity entitled to vote generally in the election of directors (or other persons having the general power to direct the affairs of such entity) is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the NEBS common stock and Outstanding NEBS Voting Securities immediately prior to such consolidation or merger in substantially the same proportions as their ownership, immediately prior to such consolidation or merger, of the NEBS common stock and Outstanding NEBS Voting Securities, as the case may be, (ii) no Person (excluding NEBS, any employee benefit plan (or related trust) of NEBS or such corporation or other business entity resulting from such consolidation or merger and any Person beneficially owning, immediately prior to such consolidation or merger, directly or indirectly, 35% or more of the NEBS common stock or Outstanding NEBS Voting Securities, as the case may be) beneficially owns, directly or indirectly, 35% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such consolidation or merger and/or the combined voting power of the then outstanding voting securities of such corporation or business entity entitled to vote generally in the election of its directors (or other persons having the general power to direct the affairs of the corporation of other business entity) and (iii) at least a majority of the members of the board of directors (or other group of persons having the general power to direct the affairs of the corporation or other business entity) resulting from such consolidation or merger were members of the NEBS Incumbent Board at the time of the execution of the initial agreement providing for such consolidation or merger; provided, that any right to receive compensation pursuant to Section 4 below which shall vest by reason of the action of the NEBS Board of Directors pursuant to this Section 2(d) shall be divested upon (A) the rejection of such agreement of consolidation or merger by NEBS' stockholders or (B) its abandonment by either party thereto in accordance with its terms; or "(e) Adoption by the requisite majority of the whole NEBS Board of Directors, or by the holders of such majority of stock of NEBS as is required by law or by NEBS' Certificate of Incorporation or By-Laws as then in effect, of a 3 resolution or consent authorizing (i) the dissolution of NEBS or (ii) the sale or other disposition of all or substantially all of the assets of NEBS, other than to a corporation or other business entity with respect to which, following such sale or other disposition, (A) more than 60% of, respectively, the then outstanding shares of common stock of such corporation and/or the combined voting power of the outstanding voting securities of such corporation or other entity entitled to vote generally in the election of its directors (or other persons having the general power to direct its affairs) is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the NEBS common stock and Outstanding NEBS Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the NEBS common stock and/or Outstanding NEBS Voting Securities, as the case may be, (B) no Person (excluding NEBS and any employee benefit plan (or related trust) of NEBS or such corporation or other business entity and any Person beneficially owning, immediately prior to such sale or other disposition, directly or indirectly, 35% or more of the NEBS common stock and/or Outstanding NEBS Voting Securities, as the case may be) beneficially owns, directly or indirectly, 35% or more of, respectively, the then outstanding shares of common stock of such corporation and/or the combined voting power of the then outstanding voting securities of such corporation or other business entity entitled to vote generally in the election of directors (or other persons having the general power to direct its affairs), and (C) at least a majority of the members of the board of directors or group of persons having the general power to direct the affairs of such corporation or other entity were members of the NEBS Incumbent Board at the time of the execution of the initial agreement of action of the NEBS Board of Directors providing for such sale or other disposition of assets of NEBS; provided, that any right to receive compensation pursuant to Section 4 below which shall vest by reason of the action of the NEBS Board of Directors or NEBS' stockholders pursuant to this Section 2(e) shall be divested upon the abandonment by NEBS of such dissolution, or such sale of or other disposition of assets, as the case may be. "Notwithstanding anything in the foregoing to the contrary, no Change in Control shall be deemed to have occurred for purposes of this Agreement or the Employment Agreement by virtue of any transaction which results in the Executive, or a group of Persons which includes the Executive, acquiring, directly or indirectly, 35% or more of the combined voting power of the Outstanding NEBS Voting Securities." 4. Section 5 of the Change in Control Agreement is hereby deleted in its entirety and the following substituted therefor: "5. Limitation on Parachute Payments. If, in the opinion of tax -------------------------------- counsel selected by the Company and NEBS and acceptable to the Executive, the Severance Payment (in its full amount or as partially reduced, as the case may be) or any other payment or benefit which constitutes a "parachute payment" within 4 the meaning of section 280G(b)(2) of the Code (whether made pursuant to this Agreement or otherwise) exceeds, either individually or in the aggregate, the amount that is deductible by the Company or NEBS by reason of section 280G, and in the opinion of such tax counsel, the Severance Payment (in its full amount or as partially reduced, as the case may be) or any other payments or benefits which constitute "parachute payments" within the meaning of section 280G of the Code are not reasonable compensation for services actually rendered or to be rendered, within the meaning of section 280G(b)(4) of the Code, the Severance Payment and/or such other payments or benefits shall be reduced by the excess of the aggregate "parachute payments" over that amount which could be paid to or for the Executive without any portion of such "parachute payments" not being deductible by reason of section 280G of the Code. The value of any non-cash benefit or any deferred cash payments shall be determined by the Company and NEBS in accordance with the principles of section 280G of the Code and the regulations promulgated thereunder. "If it is established pursuant to a final determination of a court or an Internal Revenue Service proceeding that, notwithstanding the good faith of the Executive and the Company in applying the terms of this subsection, the aggregate "parachute payments" paid to or for the Executive's benefit are in an amount that would result in any portion of such "parachute payments" not being deductible by the Company or its Affiliates (including without limitation NEBS) by reason of section 280G of the Code, then the Executive shall have the obligation to pay the Company upon demand an amount equal to the sum of (A) the excess of the aggregate "parachute payments" paid to or for the Executive's benefit over the aggregate "parachute payments" that would have been paid to or for the Executive's benefit without any portion of such "parachute payments" not being deductible by reason of section 280G of the Code; and (B) interest on the amount set forth in clause (A) of this sentence at the applicable Federal rate (as defined in section 1274(d) of the Code) from the date of the Executive's receipt of such excess until the date of such payment." 5. If the Merger Agreement is terminated for any reason prior to the occurrence of the Merger, then this First Amendment shall automatically be deemed to have been terminated and cancelled, without any further liability of either party or NEBS to each other, and the terms of the Change in Control Agreement, without giving effect to the terms of this First Amendment, shall automatically be reinstated and thereafter shall remain in full force and effect. 6. Except to the extent expressly amended hereby, the provisions of the Change in Control Agreement shall remain in full force and effect. 7. The validity, interpretation, construction and performance of this First Amendment shall be governed by the laws of the State of Minnesota. [Signature Page Follows] 5 IN WITNESS WHEREOF, the undersigned officer, on behalf of PremiumWear, Inc., and the Executive have hereunto set their hands as of the date first above written. PREMIUMWEAR, INC. By: /s/ Thomas D. Gleason ---------------------------- Its EXECUTIVE: /s/ David E. Berg ---------------------------- David E. Berg 6 EX-99.5B 10 0010.txt 1ST AMEND. TO CHANGE IN CONTROL-CYNTHIA BOEDDEKER EXHIBIT 99.5(b) FIRST AMENDMENT TO CHANGE IN CONTROL SEVERANCE AGREEMENT THIS FIRST AMENDMENT TO CHANGE IN CONTROL SEVERANCE AGREEMENT (this "First Amendment") is made and entered to by and between PremiumWear, Inc., a Delaware corporation with its principal offices at 5500 Feltl Road, Minnetonka, Minnesota (the "Company"), and Cynthia L. Boeddeker, residing at Chanhassen, Minnesota (the "Executive"), and shall be effective as of this 26th day of May, 2000. WHEREAS, the Company and the Executive are parties to a Change in Control Severance Agreement dated as of September 23, 1999 (the "Change in Control Agreement"), pursuant to which the Executive is entitled to certain benefits in the event of a termination of her employment with the Company following a "Change in Control" (as defined in the Change in Control Agreement"); and WHEREAS, pursuant to an Agreement and Plan of Merger dated as of May 26, 2000 (the "Merger Agreement"), by and among New England Business Service, Inc., a Delaware corporation ("NEBS"), Penguin Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of NEBS ("Sub"), and the Company, Sub will offer to purchase shares of the Company's common stock pursuant to a tender offer, and upon successful completion of the tender offer, will thereafter be merged with and into the Company (the "Merger"), with the Company being the surviving corporation in the Merger and a wholly-owned subsidiary of NEBS; and WHEREAS, the Company desires to secure the continuation of the Executive's services as Vice President of Operations following the Merger, and the Executive desires to perform such services for the Company, and to that end the Company and the Executive have entered into an Employment Agreement of even date herewith (the "Employment Agreement"); and WHEREAS, in order to induce the Company to enter into the Employment Agreement, the Company and the Executive desire to amend the Change in Control Agreement to provide, among other things, that the consummation of the transactions contemplated by the Merger Agreement will not constitute a "Change in Control" under the terms of the Change in Control Agreement; and WHEREAS, capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Change in Control Agreement; THEREFORE, in consideration of the foregoing and other respective covenants and agreements of the parties herein contained, the parties hereto agree as follows: 1. The Executive hereby agrees that the consummation of the transactions contemplated by the Merger Agreement (and any subsequent transactions directly related 1 thereto and contemplated thereby) will not constitute a "Change in Control" for purposes of the Change in Control Agreement. 2. The first sentence of Section 1 of the Change in Control Agreement is hereby amended by deleting the reference to "December 31, 2001", and substituting "June 30, 2003" therefor, and by deleting the reference to "January 1, 2001, and substituting "January 1, 2003" therefor. 3. Section 2 of the Change in Control Agreement is hereby deleted in its entirety and the following substituted therefor, such amendment to be effective from and after the effective time of the Merger: "2. Change in Control. No benefits shall be payable hereunder unless ----------------- there shall have been a Change in Control. For purposes of this Agreement, a "Change in Control" shall mean: "(a) Following the Merger, the Company (i) ceases to be a direct or indirect subsidiary of NEBS, or (ii) sells or otherwise disposes of all or substantially all of its assets or business to any "person" (as such term is defined in Section 3(a)(9) and as used in Section 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), being hereinafter referred to as a "Person") other than NEBS or one of its affiliates; or "(b) The acquisition by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of either (i) the then outstanding shares of NEBS common stock or (ii) the combined voting power of NEBS' outstanding securities ordinarily having the right to vote at elections of directors ("Outstanding NEBS Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from NEBS (excluding an acquisition by virtue of the exercise of a conversion privilege); (B) any acquisition by NEBS or by any corporation controlled by NEBS; (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by NEBS or any corporation controlled by NEBS; or (D) any acquisition by any corporation pursuant to a consolidation or merger if, following such consolidation or merger, the conditions described in clauses (i), (ii) and (iii) of Section 2(d) below are satisfied; or "(c) Individuals who, as of the date hereof, constitute the NEBS Board of Directors (the "NEBS Incumbent Board") ceasing for any reason to constitute at least a majority of the NEBS Board of Directors; provided, however, that any individual becoming a NEBS director (other than a director designated by a Person who has entered into an agreement with the Company to effect a transaction described in Sections 2(b) or (d)) subsequent to the date hereof whose election, or nomination for election by NEBS' stockholders, was approved by a vote or resolution of at least a majority of the directors then comprising the NEBS Incumbent Board shall be considered as though such individual were a member of the NEBS Incumbent Board, but excluding, for this purpose, any such individual 2 whose initial assumption of office occurs as a result of either an actual or threatened solicitation in opposition (as such terms are used in Rule 14a-6 of Regulation 14A promulgated under the Exchange Act) to the election of directors conducted or to be conducted by or on behalf of a Person other than the NEBS Board of Directors; or "(d) Adoption by the NEBS Board of Directors of a resolution approving an agreement of consolidation of NEBS with or merger of NEBS into another corporation or business entity in each case, unless, following such consolidation or merger, (i) more than 60% of, respectively, the then outstanding shares of common stock of the corporation resulting from such consolidation or merger and/or the combined voting power of the then outstanding voting securities of such corporation or business entity entitled to vote generally in the election of directors (or other persons having the general power to direct the affairs of such entity) is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the NEBS common stock and Outstanding NEBS Voting Securities immediately prior to such consolidation or merger in substantially the same proportions as their ownership, immediately prior to such consolidation or merger, of the NEBS common stock and Outstanding NEBS Voting Securities, as the case may be, (ii) no Person (excluding NEBS, any employee benefit plan (or related trust) of NEBS or such corporation or other business entity resulting from such consolidation or merger and any Person beneficially owning, immediately prior to such consolidation or merger, directly or indirectly, 35% or more of the NEBS common stock or Outstanding NEBS Voting Securities, as the case may be) beneficially owns, directly or indirectly, 35% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such consolidation or merger and/or the combined voting power of the then outstanding voting securities of such corporation or business entity entitled to vote generally in the election of its directors (or other persons having the general power to direct the affairs of the corporation of other business entity) and (iii) at least a majority of the members of the board of directors (or other group of persons having the general power to direct the affairs of the corporation or other business entity) resulting from such consolidation or merger were members of the NEBS Incumbent Board at the time of the execution of the initial agreement providing for such consolidation or merger; provided, that any right to receive compensation pursuant to Section 4 below which shall vest by reason of the action of the NEBS Board of Directors pursuant to this Section 2(d) shall be divested upon (A) the rejection of such agreement of consolidation or merger by NEBS' stockholders or (B) its abandonment by either party thereto in accordance with its terms; or "(e) Adoption by the requisite majority of the whole NEBS Board of Directors, or by the holders of such majority of stock of NEBS as is required by law or by NEBS' Certificate of Incorporation or By-Laws as then in effect, of a resolution or consent authorizing (i) the dissolution of NEBS or (ii) the sale or other disposition of all or substantially all of the assets of NEBS, other than to a 3 corporation or other business entity with respect to which, following such sale or other disposition, (A) more than 60% of, respectively, the then outstanding shares of common stock of such corporation and/or the combined voting power of the outstanding voting securities of such corporation or other entity entitled to vote generally in the election of its directors (or other persons having the general power to direct its affairs) is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the NEBS common stock and Outstanding NEBS Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the NEBS common stock and/or Outstanding NEBS Voting Securities, as the case may be, (B) no Person (excluding NEBS and any employee benefit plan (or related trust) of NEBS or such corporation or other business entity and any Person beneficially owning, immediately prior to such sale or other disposition, directly or indirectly, 35% or more of the NEBS common stock and/or Outstanding NEBS Voting Securities, as the case may be) beneficially owns, directly or indirectly, 35% or more of, respectively, the then outstanding shares of common stock of such corporation and/or the combined voting power of the then outstanding voting securities of such corporation or other business entity entitled to vote generally in the election of directors (or other persons having the general power to direct its affairs), and (C) at least a majority of the members of the board of directors or group of persons having the general power to direct the affairs of such corporation or other entity were members of the NEBS Incumbent Board at the time of the execution of the initial agreement of action of the NEBS Board of Directors providing for such sale or other disposition of assets of NEBS; provided, that any right to receive compensation pursuant to Section 4 below which shall vest by reason of the action of the NEBS Board of Directors or NEBS' stockholders pursuant to this Section 2(e) shall be divested upon the abandonment by NEBS of such dissolution, or such sale of or other disposition of assets, as the case may be. "Notwithstanding anything in the foregoing to the contrary, no Change in Control shall be deemed to have occurred for purposes of this Agreement or the Employment Agreement by virtue of any transaction which results in the Executive, or a group of Persons which includes the Executive, acquiring, directly or indirectly, 35% or more of the combined voting power of the Outstanding NEBS Voting Securities." 4. Section 5 of the Change in Control Agreement is hereby deleted in its entirety and the following substituted therefor: "5. Limitation on Parachute Payments. If, in the opinion of tax -------------------------------- counsel selected by the Company and NEBS and acceptable to the Executive, the Severance Payment (in its full amount or as partially reduced, as the case may be) or any other payment or benefit which constitutes a "parachute payment" within the meaning of section 280G(b)(2) of the Code (whether made pursuant to this Agreement or otherwise) exceeds, either individually or in the aggregate, the 4 amount that is deductible by the Company or NEBS by reason of section 280G, and in the opinion of such tax counsel, the Severance Payment (in its full amount or as partially reduced, as the case may be) or any other payments or benefits which constitute "parachute payments" within the meaning of section 280G of the Code are not reasonable compensation for services actually rendered or to be rendered, within the meaning of section 280G(b)(4) of the Code, the Severance Payment and/or such other payments or benefits shall be reduced by the excess of the aggregate "parachute payments" over that amount which could be paid to or for the Executive without any portion of such "parachute payments" not being deductible by reason of section 280G of the Code. The value of any non-cash benefit or any deferred cash payments shall be determined by the Company and NEBS in accordance with the principles of section 280G of the Code and the regulations promulgated thereunder. "If it is established pursuant to a final determination of a court or an Internal Revenue Service proceeding that, notwithstanding the good faith of the Executive and the Company in applying the terms of this subsection, the aggregate "parachute payments" paid to or for the Executive's benefit are in an amount that would result in any portion of such "parachute payments" not being deductible by the Company or its Affiliates (including without limitation NEBS) by reason of section 280G of the Code, then the Executive shall have the obligation to pay the Company upon demand an amount equal to the sum of (A) the excess of the aggregate "parachute payments" paid to or for the Executive's benefit over the aggregate "parachute payments" that would have been paid to or for the Executive's benefit without any portion of such "parachute payments" not being deductible by reason of section 280G of the Code; and (B) interest on the amount set forth in clause (A) of this sentence at the applicable Federal rate (as defined in section 1274(d) of the Code) from the date of the Executive's receipt of such excess until the date of such payment." 5. If the Merger Agreement is terminated for any reason prior to the occurrence of the Merger, then this First Amendment shall automatically be deemed to have been terminated and cancelled, without any further liability of either party or NEBS to each other, and the terms of the Change in Control Agreement, without giving effect to the terms of this First Amendment, shall automatically be reinstated and thereafter shall remain in full force and effect. 6. Except to the extent expressly amended hereby, the provisions of the Change in Control Agreement shall remain in full force and effect. 7. The validity, interpretation, construction and performance of this First Amendment shall be governed by the laws of the State of Minnesota. [Signature Page Follows] 5 IN WITNESS WHEREOF, the undersigned officer, on behalf of PremiumWear, Inc., and the Executive have hereunto set their hands as of the date first above written. PREMIUMWEAR, INC. By: /s/ David E. Berg ----------------------------- Its Chief Executive Officer EXECUTIVE: /s/ Cynthia L. Boeddeker ----------------------------- Cynthia L. Boeddeker 6 EX-99.5C 11 0011.txt 1ST AMEND. TO CHANGE IN CONTROL-JAMES BURY EXHIBIT 99.5(c) FIRST AMENDMENT TO CHANGE IN CONTROL SEVERANCE AGREEMENT THIS FIRST AMENDMENT TO CHANGE IN CONTROL SEVERANCE AGREEMENT (this "First Amendment") is made and entered to by and between PremiumWear, Inc., a Delaware corporation with its principal offices at 5500 Feltl Road, Minnetonka, Minnesota (the "Company"), and James S. Bury, residing at New Hope, Minnesota (the "Executive"), and shall be effective as of this 26th day of May, 2000. WHEREAS, the Company and the Executive are parties to a Change in Control Severance Agreement dated as of September 23, 1999 (the "Change in Control Agreement"), pursuant to which the Executive is entitled to certain benefits in the event of a termination of his employment with the Company following a "Change in Control" (as defined in the Change in Control Agreement"); and WHEREAS, pursuant to an Agreement and Plan of Merger dated as of May 26, 2000 (the "Merger Agreement"), by and among New England Business Service, Inc., a Delaware corporation ("NEBS"), Penguin Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of NEBS ("Sub"), and the Company, Sub will offer to purchase shares of the Company's common stock pursuant to a tender offer, and upon successful completion of the tender offer, will thereafter be merged with and into the Company (the "Merger"), with the Company being the surviving corporation in the Merger and a wholly-owned subsidiary of NEBS; and WHEREAS, the Company desires to secure the continuation of the Executive's services as Chief Financial Officer following the Merger, and the Executive desires to perform such services for the Company, and to that end the Company and the Executive have entered into an Employment Agreement of even date herewith (the "Employment Agreement"); and WHEREAS, in order to induce the Company to enter into the Employment Agreement, the Company and the Executive desire to amend the Change in Control Agreement to provide, among other things, that the consummation of the transactions contemplated by the Merger Agreement will not constitute a "Change in Control" under the terms of the Change in Control Agreement; and WHEREAS, capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Change in Control Agreement; THEREFORE, in consideration of the foregoing and other respective covenants and agreements of the parties herein contained, the parties hereto agree as follows: 1. The Executive hereby agrees that the consummation of the transactions contemplated by the Merger Agreement (and any subsequent transactions directly related 1 thereto and contemplated thereby) will not constitute a "Change in Control" for purposes of the Change in Control Agreement. 2. The first sentence of Section 1 of the Change in Control Agreement is hereby amended by deleting the reference to "December 31, 2001", and substituting "June 30, 2004" therefor, and by deleting the reference to "January 1, 2001", and substituting "January 1, 2004" therefor. 3. Section 2 of the Change in Control Agreement is hereby deleted in its entirety and the following substituted therefor, such amendment to be effective from and after the effective time of the Merger: "2. Change in Control. No benefits shall be payable hereunder unless ----------------- there shall have been a Change in Control. For purposes of this Agreement, a "Change in Control" shall mean: "(a) Following the Merger, the Company (i) ceases to be a direct or indirect subsidiary of NEBS, or (ii) sells or otherwise disposes of all or substantially all of its assets or business to any "person" (as such term is defined in Section 3(a)(9) and as used in Section 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), being hereinafter referred to as a " Person") other than NEBS or one of its affiliates; or "(b) The acquisition by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of either (i) the then outstanding shares of NEBS common stock or (ii) the combined voting power of NEBS' outstanding securities ordinarily having the right to vote at elections of directors ("Outstanding NEBS Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from NEBS (excluding an acquisition by virtue of the exercise of a conversion privilege); (B) any acquisition by NEBS or by any corporation controlled by NEBS; (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by NEBS or any corporation controlled by NEBS; or (D) any acquisition by any corporation pursuant to a consolidation or merger if, following such consolidation or merger, the conditions described in clauses (i), (ii) and (iii) of Section 2(d) below are satisfied; or "(c) Individuals who, as of the date hereof, constitute the NEBS Board of Directors (the "NEBS Incumbent Board") ceasing for any reason to constitute at least a majority of the NEBS Board of Directors; provided, however, that any individual becoming a NEBS director (other than a director designated by a Person who has entered into an agreement with the Company to effect a transaction described in Sections 2(b) or (d)) subsequent to the date hereof whose election, or nomination for election by NEBS' stockholders, was approved by a vote or resolution of at least a majority of the directors then comprising the NEBS Incumbent Board shall be considered as though such individual were a member of the NEBS Incumbent Board, but excluding, for this purpose, any such individual 2 whose initial assumption of office occurs as a result of either an actual or threatened solicitation in opposition (as such terms are used in Rule 14a-6 of Regulation 14A promulgated under the Exchange Act) to the election of directors conducted or to be conducted by or on behalf of a Person other than the NEBS Board of Directors; or "(d) Adoption by the NEBS Board of Directors of a resolution approving an agreement of consolidation of NEBS with or merger of NEBS into another corporation or business entity in each case, unless, following such consolidation or merger, (i) more than 60% of, respectively, the then outstanding shares of common stock of the corporation resulting from such consolidation or merger and/or the combined voting power of the then outstanding voting securities of such corporation or business entity entitled to vote generally in the election of directors (or other persons having the general power to direct the affairs of such entity) is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the NEBS common stock and Outstanding NEBS Voting Securities immediately prior to such consolidation or merger in substantially the same proportions as their ownership, immediately prior to such consolidation or merger, of the NEBS common stock and Outstanding NEBS Voting Securities, as the case may be, (ii) no Person (excluding NEBS, any employee benefit plan (or related trust) of NEBS or such corporation or other business entity resulting from such consolidation or merger and any Person beneficially owning, immediately prior to such consolidation or merger, directly or indirectly, 35% or more of the NEBS common stock or Outstanding NEBS Voting Securities, as the case may be) beneficially owns, directly or indirectly, 35% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such consolidation or merger and/or the combined voting power of the then outstanding voting securities of such corporation or business entity entitled to vote generally in the election of its directors (or other persons having the general power to direct the affairs of the corporation of other business entity) and (iii) at least a majority of the members of the board of directors (or other group of persons having the general power to direct the affairs of the corporation or other business entity) resulting from such consolidation or merger were members of the NEBS Incumbent Board at the time of the execution of the initial agreement providing for such consolidation or merger; provided, that any right to receive compensation pursuant to Section 4 below which shall vest by reason of the action of the NEBS Board of Directors pursuant to this Section 2(d) shall be divested upon (A) the rejection of such agreement of consolidation or merger by NEBS' stockholders or (B) its abandonment by either party thereto in accordance with its terms; or "(e) Adoption by the requisite majority of the whole NEBS Board of Directors, or by the holders of such majority of stock of NEBS as is required by law or by NEBS' Certificate of Incorporation or By-Laws as then in effect, of a resolution or consent authorizing (i) the dissolution of NEBS or (ii) the sale or other disposition of all or substantially all of the assets of NEBS, other than to a 3 corporation or other business entity with respect to which, following such sale or other disposition, (A) more than 60% of, respectively, the then outstanding shares of common stock of such corporation and/or the combined voting power of the outstanding voting securities of such corporation or other entity entitled to vote generally in the election of its directors (or other persons having the general power to direct its affairs) is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the NEBS common stock and Outstanding NEBS Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the NEBS common stock and/or Outstanding NEBS Voting Securities, as the case may be, (B) no Person (excluding NEBS and any employee benefit plan (or related trust) of NEBS or such corporation or other business entity and any Person beneficially owning, immediately prior to such sale or other disposition, directly or indirectly, 35% or more of the NEBS common stock and/or Outstanding NEBS Voting Securities, as the case may be) beneficially owns, directly or indirectly, 35% or more of, respectively, the then outstanding shares of common stock of such corporation and/or the combined voting power of the then outstanding voting securities of such corporation or other business entity entitled to vote generally in the election of directors (or other persons having the general power to direct its affairs), and (C) at least a majority of the members of the board of directors or group of persons having the general power to direct the affairs of such corporation or other entity were members of the NEBS Incumbent Board at the time of the execution of the initial agreement of action of the NEBS Board of Directors providing for such sale or other disposition of assets of NEBS; provided, that any right to receive compensation pursuant to Section 4 below which shall vest by reason of the action of the NEBS Board of Directors or NEBS' stockholders pursuant to this Section 2(e) shall be divested upon the abandonment by NEBS of such dissolution, or such sale of or other disposition of assets, as the case may be. "Notwithstanding anything in the foregoing to the contrary, no Change in Control shall be deemed to have occurred for purposes of this Agreement by virtue of any transaction which results in the Executive, or a group of Persons which includes the Executive, acquiring, directly or indirectly, 35% or more of the combined voting power of the Outstanding NEBS Voting Securities." 4. Section 5 of the Change in Control Agreement is hereby deleted in its entirety and the following substituted therefor: "5. Limitation on Parachute Payments. If, in the opinion of tax -------------------------------- counsel selected by the Company and NEBS and acceptable to the Executive, the Severance Payment (in its full amount or as partially reduced, as the case may be) or any other payment or benefit which constitutes a "parachute payment" within the meaning of section 280G(b)(2) of the Code (whether made pursuant to this Agreement or otherwise) exceeds, either individually or in the aggregate, the amount that is deductible by the Company or NEBS by reason of section 280G, 4 and in the opinion of such tax counsel, the Severance Payment (in its full amount or as partially reduced, as the case may be) or any other payments or benefits which constitute "parachute payments" within the meaning of section 280G of the Code are not reasonable compensation for services actually rendered or to be rendered, within the meaning of section 280G(b)(4) of the Code, the Severance Payment and/or such other payments or benefits shall be reduced by the excess of the aggregate "parachute payments" over that amount which could be paid to or for the Executive without any portion of such "parachute payments" not being deductible by reason of section 280G of the Code. The value of any non-cash benefit or any deferred cash payments shall be determined by the Company and NEBS in accordance with the principles of section 280G of the Code and the regulations promulgated thereunder. "If it is established pursuant to a final determination of a court or an Internal Revenue Service proceeding that, notwithstanding the good faith of the Executive and the Company in applying the terms of this subsection, the aggregate "parachute payments" paid to or for the Executive's benefit are in an amount that would result in any portion of such "parachute payments" not being deductible by the Company or its Affiliates (including without limitation NEBS) by reason of section 280G of the Code, then the Executive shall have the obligation to pay the Company upon demand an amount equal to the sum of (A) the excess of the aggregate "parachute payments" paid to or for the Executive's benefit over the aggregate "parachute payments" that would have been paid to or for the Executive's benefit without any portion of such "parachute payments" not being deductible by reason of section 280G of the Code; and (B) interest on the amount set forth in clause (A) of this sentence at the applicable Federal rate (as defined in section 1274(d) of the Code) from the date of the Executive's receipt of such excess until the date of such payment." 5. If the Merger Agreement is terminated for any reason prior to the occurrence of the Merger, then this First Amendment shall automatically be deemed to have been terminated and cancelled, without any further liability of either party or NEBS to each other, and the terms of the Change in Control Agreement, without giving effect to the terms of this First Amendment, shall automatically be reinstated and thereafter shall remain in full force and effect. 6. Except to the extent expressly amended hereby, the provisions of the Change in Control Agreement shall remain in full force and effect. 7. The validity, interpretation, construction and performance of this First Amendment shall be governed by the laws of the State of Minnesota. [Signature Page Follows] 5 IN WITNESS WHEREOF, the undersigned officer, on behalf of PremiumWear, Inc., and the Executive have hereunto set their hands as of the date first above written. PREMIUMWEAR, INC. By: /s/ David E. Berg --------------------------- Its Chief Executive Officer EXECUTIVE: /s/ James S. Bury --------------------------- James S. Bury 6 EX-99.5D 12 0012.txt 1ST AMEND. TO CHANGE IN CONTROL-TIMOTHY KLOUDA EXHIBIT 99.5(d) FIRST AMENDMENT TO CHANGE IN CONTROL SEVERANCE AGREEMENT THIS FIRST AMENDMENT TO CHANGE IN CONTROL SEVERANCE AGREEMENT (this "First Amendment") is made and entered to by and between PremiumWear, Inc., a Delaware corporation with its principal offices at 5500 Feltl Road, Minnetonka, Minnesota (the "Company"), and Timothy C. Klouda, residing at Chanhassen, Minnesota (the "Executive"), and shall be effective as of this 26th day of May, 2000. WHEREAS, the Company and the Executive are parties to a Change in Control Severance Agreement dated as of September 23, 1999 (the "Change in Control Agreement"), pursuant to which the Executive is entitled to certain benefits in the event of a termination of his employment with the Company following a "Change in Control" (as defined in the Change in Control Agreement"); and WHEREAS, pursuant to an Agreement and Plan of Merger dated as of May 26, 2000 (the "Merger Agreement"), by and among New England Business Service, Inc., a Delaware corporation ("NEBS"), Penguin Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of NEBS ("Sub"), and the Company, Sub will offer to purchase shares of the Company's common stock pursuant to a tender offer, and upon successful completion of the tender offer, will thereafter be merged with and into the Company (the "Merger"), with the Company being the surviving corporation in the Merger and a wholly-owned subsidiary of NEBS; and WHEREAS, the Company desires to secure the continuation of the Executive's services as President of the Promotional Products Division following the Merger, and the Executive desires to perform such services for the Company, and to that end the Company and the Executive have entered into an Employment Agreement of even date herewith (the "Employment Agreement"); and WHEREAS, in order to induce the Company to enter into the Employment Agreement, the Company and the Executive desire to amend the Change in Control Agreement to provide, among other things, that the consummation of the transactions contemplated by the Merger Agreement will not constitute a "Change in Control" under the terms of the Change in Control Agreement; and WHEREAS, capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Change in Control Agreement; THEREFORE, in consideration of the foregoing and other respective covenants and agreements of the parties herein contained, the parties hereto agree as follows: 1. The Executive hereby agrees that the consummation of the transactions contemplated by the Merger Agreement (and any subsequent transactions directly related 1 thereto and contemplated thereby) will not constitute a "Change in Control" for purposes of the Change in Control Agreement. 2. The first sentence of Section 1 of the Change in Control Agreement is hereby amended by deleting the reference to "December 31, 2001", and substituting "June 30, 2004" therefor, and by deleting the reference to "January 1, 2001", and substituting "January 1, 2004" therefor. 3. Section 2 of the Change in Control Agreement is hereby deleted in its entirety and the following substituted therefor, such amendment to be effective from and after the effective time of the Merger: "2. Change in Control. No benefits shall be payable hereunder unless ----------------- there shall have been a Change in Control. For purposes of this Agreement, a "Change in Control" shall mean: "(a) Following the Merger, the Company (i) ceases to be a direct or indirect subsidiary of NEBS, or (ii) sells or otherwise disposes of all or substantially all of its assets or business to any "person" (as such term is defined in Section 3(a)(9) and as used in Section 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), being hereinafter referred to as a " Person") other than NEBS or one of its affiliates; or "(b) The acquisition by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of either (i) the then outstanding shares of NEBS common stock or (ii) the combined voting power of NEBS' outstanding securities ordinarily having the right to vote at elections of directors ("Outstanding NEBS Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from NEBS (excluding an acquisition by virtue of the exercise of a conversion privilege); (B) any acquisition by NEBS or by any corporation controlled by NEBS; (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by NEBS or any corporation controlled by NEBS; or (D) any acquisition by any corporation pursuant to a consolidation or merger if, following such consolidation or merger, the conditions described in clauses (i), (ii) and (iii) of Section 2(d) below are satisfied; or "(c) Individuals who, as of the date hereof, constitute the NEBS Board of Directors (the "NEBS Incumbent Board") ceasing for any reason to constitute at least a majority of the NEBS Board of Directors; provided, however, that any individual becoming a NEBS director (other than a director designated by a Person who has entered into an agreement with the Company to effect a transaction described in Sections 2(b) or (d)) subsequent to the date hereof whose election, or nomination for election by NEBS' stockholders, was approved by a vote or resolution of at least a majority of the directors then comprising the NEBS Incumbent Board shall be considered as though such individual were a member of the NEBS Incumbent Board, but excluding, for this purpose, any such individual 2 whose initial assumption of office occurs as a result of either an actual or threatened solicitation in opposition (as such terms are used in Rule 14a-6 of Regulation 14A promulgated under the Exchange Act) to the election of directors conducted or to be conducted by or on behalf of a Person other than the NEBS Board of Directors; or "(d) Adoption by the NEBS Board of Directors of a resolution approving an agreement of consolidation of NEBS with or merger of NEBS into another corporation or business entity in each case, unless, following such consolidation or merger, (i) more than 60% of, respectively, the then outstanding shares of common stock of the corporation resulting from such consolidation or merger and/or the combined voting power of the then outstanding voting securities of such corporation or business entity entitled to vote generally in the election of directors (or other persons having the general power to direct the affairs of such entity) is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the NEBS common stock and Outstanding NEBS Voting Securities immediately prior to such consolidation or merger in substantially the same proportions as their ownership, immediately prior to such consolidation or merger, of the NEBS common stock and Outstanding NEBS Voting Securities, as the case may be, (ii) no Person (excluding NEBS, any employee benefit plan (or related trust) of NEBS or such corporation or other business entity resulting from such consolidation or merger and any Person beneficially owning, immediately prior to such consolidation or merger, directly or indirectly, 35% or more of the NEBS common stock or Outstanding NEBS Voting Securities, as the case may be) beneficially owns, directly or indirectly, 35% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such consolidation or merger and/or the combined voting power of the then outstanding voting securities of such corporation or business entity entitled to vote generally in the election of its directors (or other persons having the general power to direct the affairs of the corporation of other business entity) and (iii) at least a majority of the members of the board of directors (or other group of persons having the general power to direct the affairs of the corporation or other business entity) resulting from such consolidation or merger were members of the NEBS Incumbent Board at the time of the execution of the initial agreement providing for such consolidation or merger; provided, that any right to receive compensation pursuant to Section 4 below which shall vest by reason of the action of the NEBS Board of Directors pursuant to this Section 2(d) shall be divested upon (A) the rejection of such agreement of consolidation or merger by NEBS' stockholders or (B) its abandonment by either party thereto in accordance with its terms; or "(e) Adoption by the requisite majority of the whole NEBS Board of Directors, or by the holders of such majority of stock of NEBS as is required by law or by NEBS' Certificate of Incorporation or By-Laws as then in effect, of a resolution or consent authorizing (i) the dissolution of NEBS or (ii) the sale or other disposition of all or substantially all of the assets of NEBS, other than to a 3 corporation or other business entity with respect to which, following such sale or other disposition, (A) more than 60% of, respectively, the then outstanding shares of common stock of such corporation and/or the combined voting power of the outstanding voting securities of such corporation or other entity entitled to vote generally in the election of its directors (or other persons having the general power to direct its affairs) is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the NEBS common stock and Outstanding NEBS Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the NEBS common stock and/or Outstanding NEBS Voting Securities, as the case may be, (B) no Person (excluding NEBS and any employee benefit plan (or related trust) of NEBS or such corporation or other business entity and any Person beneficially owning, immediately prior to such sale or other disposition, directly or indirectly, 35% or more of the NEBS common stock and/or Outstanding NEBS Voting Securities, as the case may be) beneficially owns, directly or indirectly, 35% or more of, respectively, the then outstanding shares of common stock of such corporation and/or the combined voting power of the then outstanding voting securities of such corporation or other business entity entitled to vote generally in the election of directors (or other persons having the general power to direct its affairs), and (C) at least a majority of the members of the board of directors or group of persons having the general power to direct the affairs of such corporation or other entity were members of the NEBS Incumbent Board at the time of the execution of the initial agreement of action of the NEBS Board of Directors providing for such sale or other disposition of assets of NEBS; provided, that any right to receive compensation pursuant to Section 4 below which shall vest by reason of the action of the NEBS Board of Directors or NEBS' stockholders pursuant to this Section 2(e) shall be divested upon the abandonment by NEBS of such dissolution, or such sale of or other disposition of assets, as the case may be. "Notwithstanding anything in the foregoing to the contrary, no Change in Control shall be deemed to have occurred for purposes of this Agreement or the Employment Agreement by virtue of any transaction which results in the Executive, or a group of Persons which includes the Executive, acquiring, directly or indirectly, 35% or more of the combined voting power of the Outstanding NEBS Voting Securities." 4. Section 5 of the Change in Control Agreement is hereby deleted in its entirety and the following substituted therefor: "5. Limitation on Parachute Payments. If, in the opinion of tax -------------------------------- counsel selected by the Company and NEBS and acceptable to the Executive, the Severance Payment (in its full amount or as partially reduced, as the case may be) or any other payment or benefit which constitutes a "parachute payment" within the meaning of section 280G(b)(2) of the Code (whether made pursuant to this Agreement or otherwise) exceeds, either individually or in the aggregate, the 4 amount that is deductible by the Company or NEBS by reason of section 280G, and in the opinion of such tax counsel, the Severance Payment (in its full amount or as partially reduced, as the case may be) or any other payments or benefits which constitute "parachute payments" within the meaning of section 280G of the Code are not reasonable compensation for services actually rendered or to be rendered, within the meaning of section 280G(b)(4) of the Code, the Severance Payment and/or such other payments or benefits shall be reduced by the excess of the aggregate "parachute payments" over that amount which could be paid to or for the Executive without any portion of such "parachute payments" not being deductible by reason of section 280G of the Code. The value of any non-cash benefit or any deferred cash payments shall be determined by the Company and NEBS in accordance with the principles of section 280G of the Code and the regulations promulgated thereunder. "If it is established pursuant to a final determination of a court or an Internal Revenue Service proceeding that, notwithstanding the good faith of the Executive and the Company in applying the terms of this subsection, the aggregate "parachute payments" paid to or for the Executive's benefit are in an amount that would result in any portion of such "parachute payments" not being deductible by the Company or its Affiliates (including without limitation NEBS) by reason of section 280G of the Code, then the Executive shall have the obligation to pay the Company upon demand an amount equal to the sum of (A) the excess of the aggregate "parachute payments" paid to or for the Executive's benefit over the aggregate "parachute payments" that would have been paid to or for the Executive's benefit without any portion of such "parachute payments" not being deductible by reason of section 280G of the Code; and (B) interest on the amount set forth in clause (A) of this sentence at the applicable Federal rate (as defined in section 1274(d) of the Code) from the date of the Executive's receipt of such excess until the date of such payment." 5. If the Merger Agreement is terminated for any reason prior to the occurrence of the Merger, then this First Amendment shall automatically be deemed to have been terminated and cancelled, without any further liability of either party or NEBS to each other, and the terms of the Change in Control Agreement, without giving effect to the terms of this First Amendment, shall automatically be reinstated and thereafter shall remain in full force and effect. 6. Except to the extent expressly amended hereby, the provisions of the Change in Control Agreement shall remain in full force and effect. 7. The validity, interpretation, construction and performance of this First Amendment shall be governed by the laws of the State of Minnesota. [Signature Page Follows] 5 IN WITNESS WHEREOF, the undersigned officer, on behalf of PremiumWear, Inc., and the Executive have hereunto set their hands as of the date first above written. PREMIUMWEAR, INC. By: /s/ David E. Berg --------------------------- Its Chief Executive Officer EXECUTIVE: /s/ Timothy C. Klouda --------------------------- Timothy C. Klouda 6 EX-99.5E 13 0013.txt 1ST AMEND. TO CHANGE IN CONTROL-DENNIS LENZ EXHIBIT 99.5(e) FIRST AMENDMENT TO CHANGE IN CONTROL SEVERANCE AGREEMENT THIS FIRST AMENDMENT TO CHANGE IN CONTROL SEVERANCE AGREEMENT (this "First Amendment") is made and entered to by and between PremiumWear, Inc., a Delaware corporation with its principal offices at 5500 Feltl Road, Minnetonka, Minnesota (the "Company"), and Dennis G. Lenz, residing at Minnetonka, Minnesota (the "Executive"), and shall be effective as of this 26th day of May, 2000. WHEREAS, the Company and the Executive are parties to a Change in Control Severance Agreement dated as of September 23, 1999 (the "Change in Control Agreement"), pursuant to which the Executive is entitled to certain benefits in the event of a termination of his employment with the Company following a "Change in Control" (as defined in the Change in Control Agreement"); and WHEREAS, pursuant to an Agreement and Plan of Merger dated as of May 26, 2000 (the "Merger Agreement"), by and among New England Business Service, Inc., a Delaware corporation ("NEBS"), Penguin Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of NEBS ("Sub"), and the Company, Sub will offer to purchase shares of the Company's common stock pursuant to a tender offer, and upon successful completion of the tender offer, will thereafter be merged with and into the Company (the "Merger"), with the Company being the surviving corporation in the Merger and a wholly-owned subsidiary of NEBS; and WHEREAS, the Company desires to secure the continuation of the Executive's services as Executive Vice President of the Promotional Products Division following the Merger, and the Executive desires to perform such services for the Company, and to that end the Company and the Executive have entered into an Employment Agreement of even date herewith (the "Employment Agreement"); and WHEREAS, in order to induce the Company to enter into the Employment Agreement, the Company and the Executive desire to amend the Change in Control Agreement to provide, among other things, that the consummation of the transactions contemplated by the Merger Agreement will not constitute a "Change in Control" under the terms of the Change in Control Agreement; and WHEREAS, capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Change in Control Agreement; THEREFORE, in consideration of the foregoing and other respective covenants and agreements of the parties herein contained, the parties hereto agree as follows: 1. The Executive hereby agrees that the consummation of the transactions contemplated by the Merger Agreement (and any subsequent transactions directly related 1 thereto and contemplated thereby) will not constitute a "Change in Control" for purposes of the Change in Control Agreement. 2. The first sentence of Section 1 of the Change in Control Agreement is hereby amended by deleting the reference to "December 31, 2001", and substituting "June 30, 2004" therefor, and by deleting the reference to "January 1, 2001", and substituting "January 1, 2004" therefor. 3. Section 2 of the Change in Control Agreement is hereby deleted in its entirety and the following substituted therefor, such amendment to be effective from and after the effective time of the Merger: "2. Change in Control. No benefits shall be payable hereunder unless ----------------- there shall have been a Change in Control. For purposes of this Agreement, a "Change in Control" shall mean: "(a) Following the Merger, the Company (i) ceases to be a direct or indirect subsidiary of NEBS, or (ii) sells or otherwise disposes of all or substantially all of its assets or business to any "person" (as such term is defined in Section 3(a)(9) and as used in Section 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), being hereinafter referred to as a "Person") other than NEBS or one of its affiliates; or "(b) The acquisition by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of either (i) the then outstanding shares of NEBS common stock or (ii) the combined voting power of NEBS' outstanding securities ordinarily having the right to vote at elections of directors ("Outstanding NEBS Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from NEBS (excluding an acquisition by virtue of the exercise of a conversion privilege); (B) any acquisition by NEBS or by any corporation controlled by NEBS; (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by NEBS or any corporation controlled by NEBS; or (D) any acquisition by any corporation pursuant to a consolidation or merger if, following such consolidation or merger, the conditions described in clauses (i), (ii) and (iii) of Section 2(d) below are satisfied; or "(c) Individuals who, as of the date hereof, constitute the NEBS Board of Directors (the "NEBS Incumbent Board") ceasing for any reason to constitute at least a majority of the NEBS Board of Directors; provided, however, that any individual becoming a NEBS director (other than a director designated by a Person who has entered into an agreement with the Company to effect a transaction described in Sections 2(b) or (d)) subsequent to the date hereof whose election, or nomination for election by NEBS' stockholders, was approved by a vote or resolution of at least a majority of the directors then comprising the NEBS Incumbent Board shall be considered as though such individual were a member of the NEBS Incumbent Board, but excluding, for this purpose, any such individual 2 whose initial assumption of office occurs as a result of either an actual or threatened solicitation in opposition (as such terms are used in Rule 14a-6 of Regulation 14A promulgated under the Exchange Act) to the election of directors conducted or to be conducted by or on behalf of a Person other than the NEBS Board of Directors; or "(d) Adoption by the NEBS Board of Directors of a resolution approving an agreement of consolidation of NEBS with or merger of NEBS into another corporation or business entity in each case, unless, following such consolidation or merger, (i) more than 60% of, respectively, the then outstanding shares of common stock of the corporation resulting from such consolidation or merger and/or the combined voting power of the then outstanding voting securities of such corporation or business entity entitled to vote generally in the election of directors (or other persons having the general power to direct the affairs of such entity) is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the NEBS common stock and Outstanding NEBS Voting Securities immediately prior to such consolidation or merger in substantially the same proportions as their ownership, immediately prior to such consolidation or merger, of the NEBS common stock and Outstanding NEBS Voting Securities, as the case may be, (ii) no Person (excluding NEBS, any employee benefit plan (or related trust) of NEBS or such corporation or other business entity resulting from such consolidation or merger and any Person beneficially owning, immediately prior to such consolidation or merger, directly or indirectly, 35% or more of the NEBS common stock or Outstanding NEBS Voting Securities, as the case may be) beneficially owns, directly or indirectly, 35% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such consolidation or merger and/or the combined voting power of the then outstanding voting securities of such corporation or business entity entitled to vote generally in the election of its directors (or other persons having the general power to direct the affairs of the corporation of other business entity) and (iii) at least a majority of the members of the board of directors (or other group of persons having the general power to direct the affairs of the corporation or other business entity) resulting from such consolidation or merger were members of the NEBS Incumbent Board at the time of the execution of the initial agreement providing for such consolidation or merger; provided, that any right to receive compensation pursuant to Section 4 below which shall vest by reason of the action of the NEBS Board of Directors pursuant to this Section 2(d) shall be divested upon (A) the rejection of such agreement of consolidation or merger by NEBS' stockholders or (B) its abandonment by either party thereto in accordance with its terms; or "(e) Adoption by the requisite majority of the whole NEBS Board of Directors, or by the holders of such majority of stock of NEBS as is required by law or by NEBS' Certificate of Incorporation or By-Laws as then in effect, of a resolution or consent authorizing (i) the dissolution of NEBS or (ii) the sale or other disposition of all or substantially all of the assets of NEBS, other than to a 3 corporation or other business entity with respect to which, following such sale or other disposition, (A) more than 60% of, respectively, the then outstanding shares of common stock of such corporation and/or the combined voting power of the outstanding voting securities of such corporation or other entity entitled to vote generally in the election of its directors (or other persons having the general power to direct its affairs) is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the NEBS common stock and Outstanding NEBS Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the NEBS common stock and/or Outstanding NEBS Voting Securities, as the case may be, (B) no Person (excluding NEBS and any employee benefit plan (or related trust) of NEBS or such corporation or other business entity and any Person beneficially owning, immediately prior to such sale or other disposition, directly or indirectly, 35% or more of the NEBS common stock and/or Outstanding NEBS Voting Securities, as the case may be) beneficially owns, directly or indirectly, 35% or more of, respectively, the then outstanding shares of common stock of such corporation and/or the combined voting power of the then outstanding voting securities of such corporation or other business entity entitled to vote generally in the election of directors (or other persons having the general power to direct its affairs), and (C) at least a majority of the members of the board of directors or group of persons having the general power to direct the affairs of such corporation or other entity were members of the NEBS Incumbent Board at the time of the execution of the initial agreement of action of the NEBS Board of Directors providing for such sale or other disposition of assets of NEBS; provided, that any right to receive compensation pursuant to Section 4 below which shall vest by reason of the action of the NEBS Board of Directors or NEBS' stockholders pursuant to this Section 2(e) shall be divested upon the abandonment by NEBS of such dissolution, or such sale of or other disposition of assets, as the case may be. "Notwithstanding anything in the foregoing to the contrary, no Change in Control shall be deemed to have occurred for purposes of this Agreement or the Employment Agreement by virtue of any transaction which results in the Executive, or a group of Persons which includes the Executive, acquiring, directly or indirectly, 35% or more of the combined voting power of the Outstanding NEBS Voting Securities." 4. Section 5 of the Change in Control Agreement is hereby deleted in its entirety and the following substituted therefor: "5. Limitation on Parachute Payments. If, in the opinion of tax -------------------------------- counsel selected by the Company and NEBS and acceptable to the Executive, the Severance Payment (in its full amount or as partially reduced, as the case may be) or any other payment or benefit which constitutes a "parachute payment" within the meaning of section 280G(b)(2) of the Code (whether made pursuant to this Agreement or otherwise) exceeds, either individually or in the aggregate, the 4 amount that is deductible by the Company or NEBS by reason of section 280G, and in the opinion of such tax counsel, the Severance Payment (in its full amount or as partially reduced, as the case may be) or any other payments or benefits which constitute "parachute payments" within the meaning of section 280G of the Code are not reasonable compensation for services actually rendered or to be rendered, within the meaning of section 280G(b)(4) of the Code, the Severance Payment and/or such other payments or benefits shall be reduced by the excess of the aggregate "parachute payments" over that amount which could be paid to or for the Executive without any portion of such "parachute payments" not being deductible by reason of section 280G of the Code. The value of any non-cash benefit or any deferred cash payments shall be determined by the Company and NEBS in accordance with the principles of section 280G of the Code and the regulations promulgated thereunder. "If it is established pursuant to a final determination of a court or an Internal Revenue Service proceeding that, notwithstanding the good faith of the Executive and the Company in applying the terms of this subsection, the aggregate "parachute payments" paid to or for the Executive's benefit are in an amount that would result in any portion of such "parachute payments" not being deductible by the Company or its Affiliates (including without limitation NEBS) by reason of section 280G of the Code, then the Executive shall have the obligation to pay the Company upon demand an amount equal to the sum of (A) the excess of the aggregate "parachute payments" paid to or for the Executive's benefit over the aggregate "parachute payments" that would have been paid to or for the Executive's benefit without any portion of such "parachute payments" not being deductible by reason of section 280G of the Code; and (B) interest on the amount set forth in clause (A) of this sentence at the applicable Federal rate (as defined in section 1274(d) of the Code) from the date of the Executive's receipt of such excess until the date of such payment." 5. If the Merger Agreement is terminated for any reason prior to the occurrence of the Merger, then this First Amendment shall automatically be deemed to have been terminated and cancelled, without any further liability of either party or NEBS to each other, and the terms of the Change in Control Agreement, without giving effect to the terms of this First Amendment, shall automatically be reinstated and thereafter shall remain in full force and effect. 6. Except to the extent expressly amended hereby, the provisions of the Change in Control Agreement shall remain in full force and effect. 7. The validity, interpretation, construction and performance of this First Amendment shall be governed by the laws of the State of Minnesota. [Signature Page Follows] 5 IN WITNESS WHEREOF, the undersigned officer, on behalf of PremiumWear, Inc., and the Executive have hereunto set their hands as of the date first above written. PREMIUMWEAR, INC. By: /s/ David E. Berg -------------------------- Its EXECUTIVE: /s/ Dennis G. Lenz ------------------------------ Dennis G. Lenz 6 EX-99.6 14 0014.txt CONSULTING AGREEMENT-THOMAS GLEASON EXHIBIT 99.6 CONSULTING AGREEMENT -------------------- CONSULTING AGREEMENT ("Agreement"), dated as of May 26, 2000, between PremiumWear, Inc. a Delaware corporation (the "Company"), New England Business Service, Inc., a Delaware corporation ("NEBS") and Thomas D. Gleason (the "Consultant"). WHEREAS, the Consultant is employed by the Company as executive Chairman of the Board of Directors of the Company; WHEREAS, the Consultant and Company have entered into an Amended and Restated Change in Control Severance Agreement effective as of September 28, 1999 and amended as of May 17, 2000 (the "Prior Agreement"); WHEREAS, the Company and NEBS have entered into an Agreement and Plan of Merger, dated as of May 26, 2000 (the "Merger Agreement"), pursuant to which, among other things, the Company will become a wholly-owned subsidiary of NEBS; WHEREAS, the Company desires to induce the Consultant to act as a consultant to the Company commencing as of the date on which the Effective Time (as defined in the Merger Agreement) occurs (hereinafter, the "Effective Date") in order to assist it, among other things, in effectuating an orderly and efficient transi-tion in respect of the Merger (as defined in the Merger Agreement) and the transac tions contemplated by the Merger Agreement and to prevent the Consultant from engaging in activities which are competitive with the business of the Company, and the Consultant desires to act as a consultant to the Company commencing as of the Effective Date and is, in consideration of the benefits to him of this Agreement, willing to restrict his ability to compete with the business of the Company. NOW THEREFORE, in order to effect the foregoing, the Company and the Consultant wish to enter into this Agreement upon the terms and subject to the conditions set forth below. Accordingly, in consideration of the premises and the respective covenants and agreements of the parties herein contained, the sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the Company hereby agrees to engage the Consultant, and the Consultant hereby agrees to perform services for the Company, on the terms and conditions set forth herein. 1. Term. The term of this Agreement (the "Term") shall com mence ---- as of the Effective Date and terminate on the second anniversary thereof. This Agreement shall be null and void and of no force or effect if the Effective Time does not occur. 2. Duties. From time to time during the Term, the Consultant shall ------ perform such services as the Company shall reasonably request, including assisting the Company in effecting an orderly and efficient transition in respect of the Merger and the transactions contemplated by the Merger Agreement. Upon request by the Company, the Consultant shall provide consulting services to the Company hereunder not to exceed 20 hours during any calendar month in the Term. The scheduling of such time shall be mutually agreeable to the Consultant and the Company. Subject to the Consultant's obligations hereunder (including Section 7 hereof), the Company acknowledges that the Consultant is permitted to pursue other activities, whether of a personal or business nature. 3. Place of Performance. The Consultant shall perform his duties -------------------- and conduct his business at such locations as are reasonably acceptable to him and the Company, including the Consultant's places of residence in Grand Rapids, Michigan and Naples, Florida. 4. Independent Contractor. During the Term, the Consultant shall be ---------------------- an independent contractor and not an employee of the Company and is not entitled to the benefits provided by the Company and/or its affiliates to its employ ees. Accordingly, Consultant shall be responsible for payment of all taxes, including Federal and state income tax, Social Security tax, unemployment insurance tax, and any other applicable taxes with respect to remuneration received by him pursuant to this Agreement. 5. Compensation. ------------ (a) As of the Effective Date, the Company shall pay to the consultant an engagement fee of $240,000. (b) Consulting Fee. During the Term the Company shall pay to -------------- the Consultant, as compensation for the services to be performed by the Consul tant hereunder, an aggregate consulting fee of $342,500 (the "Total Consulting Fee") payable in equal monthly installments. (c) Business Expenses. The Company shall reimburse the ----------------- Consultant for all reasonable business expenses incurred by him in connection with his performance of consulting services hereunder upon submission by the Consultant of receipts and other documentation in accordance with the Company's normal reim bursement procedures. The Consultant shall not, without the prior written consent of the Company and NEBS, incur more than $500.00 in such expenses in any calendar month during the Term. For the avoidance of doubt, the cost of the rental of Consul tant's current office space in Grand Rapids, Michigan and related telephone and office supply expenses and professional dues will not be business expenses hereun der and the Consultant shall be responsible for any such costs. (d) Other Benefits. Nothing in this Agreement shall alter or -------------- impair the rights of the Consultant to any employee benefit to which the Consultant is or will become entitled as a result of his employment with the Company, including, but not limited to, health insurance and life insurance continuation at the Consul-tant's sole expense. 6. Termination. The Consultant's engagement as a consultant ----------- hereunder shall terminate without further action by any party hereto upon the expi ration of the Term. This Agreement may also be terminated by the Company without further obligation other than for fees already earned or as set forth in the last sentence of this Section 6 if the Consultant (a) is convicted of a felony or (b) materially violates the provisions of Section 7 hereof. This Agreement may also be terminated by the Consultant upon written notice by the Consultant. Upon any termination of the Consultant's engagement as a consultant hereunder, the parties hereto shall have no further obligation or liability under this Agreement, other than those described in Section 18 below except that the Company shall reimburse the Consultant for all rea sonable expenses incurred hereunder prior to the date of termination. 7. Additional Covenants. -------------------- (a) The Consultant acknowledges that (i) the sale of apparel products to members of the Promotional Products Association International, the Ad Specialty Industry market and the uniform market (hereinafter, the "Business") is intensely competitive and that Consultant's past employment by and service with the Company during the Term has given and will give the Consultant knowledge of and access to confidential information of the Company, including, but not limited to, the identity of the Company's customers, the identity of the representatives of customers with whom the Company has dealt, the kinds of services provided by the Company to customers and offered to be performed for potential customers, the manner in which such services are performed or offered to be performed, the service needs of actual or prospective customers, pricing information, information concerning the creation, acquisition or disposition of products and services, customer maintenance listings, computer software applications and other programs, personnel information and other trade secrets (the "Confidential Information"); (ii) the direct and indirect disclosure of any such Confidential Information to existing or potential competitors of the Company would place the Company at a competitive disadvantage and would do damage, monetary or otherwise, to the Company's business; and (iii) the engaging by Consultant in any of the activities prohibited by this Section 7 may constitute improper appropriation and/or use of such information and trade secrets. Consultant expressly acknowledges the trade secret status of the Confidential Information and that the Confidential Information constitutes a protectible business interest of the Company. Accordingly, the Company and Consultant agree as follows: (A) for all purposes of this Section 7, the Company shall be construed to include the Company, NEBS and any parents, subsidiaries and affiliates engaged in the Business; (B) during the Term of this Agreement and at all times after the termination of Consul tant's service by expiration of the Term or otherwise, Consultant shall not, without written permission, directly or indirectly, whether individually, as a director, stock holder, owner, partner, employee, principal or agent of any business, or in any other capacity, make known, disclose, furnish, make available or utilize any of the Confi dential Information, other than in the proper performance of the duties contemplated herein; (C) Consultant agrees to return all Confidential Information, including all photocopies, extracts and summaries thereof, and any such information stored electronically on tapes, computer disks or in any other manner to the Company at any time upon request by the Company and upon the termination of his service for any reason. The Consultant's non-disclosure obligations hereunder will not apply, or will cease to apply, as the case may be, to that Confidential Information which (i) is or hereafter becomes generally known or available to the public or to interested persons other than through a breach of this Agreement by the Consultant, (ii) is rightfully known to the Consultant without restriction on disclosure at the time of its receipt from the Company (including general information and knowledge obtained by the Consultant as a result of his years of experience as an executive in various busi-nesses, including those engaged in by the Company), (iii) is rightfully obtained by the Consultant from a third party without breach of an obligation of confidentiality to the Company, (iv) is independently developed by the Consultant, or (v) is approved for release by the Company. (b) During the Term, the Consultant shall not engage in "Competition" with the Company. For purposes of this Agreement, Competition by Consultant shall mean Consultant's engaging in, or otherwise directly or indirectly being employed by or acting as a consultant or lender to, or being a director, officer, employee, principal, agent, stockholder, member, owner or partner of, or permitting his name to be used in connection with the activities of any other business or organization anywhere in the United States which is engaged in the business which competes directly with the Business. It shall not be a violation of this sub-paragraph for Consultant to become the registered or beneficial owner of up to five percent (5%) of any class of the capital stock of a competing corporation registered under the Securities Exchange Act of 1934, as amended, provided that Consultant does not actively participate in the business of such corporation during the Term. (c) During the Term, the Consultant shall not, directly or indirectly, for his benefit or for the benefit of any other person, firm or entity, do any of the following: (i) solicit from any customer doing business with the Company business of the same or of a similar nature to the business of the Company with such customer; (ii) solicit from any person firm or entity actually known by the Consul-tant to be a potential customer of the Company business of the same or of a similar nature to that which has been the subject of a written or oral bid, offer or proposal by the Company actually known by the Consultant, or of substantial preparation by the Company known by the Consultant with a view to making such a bid, proposal or offer; (iii) solicit the employment or services of, or hire, any person who is em-ployed by or a consultant to the Company; or (iv) otherwise interfere with the business or accounts of the Company. (d) Notwithstanding the foregoing, but subject to the provi sions of this Section 7(d), it shall not be a violation of Section 7(b) or 7(c) hereof for the Consultant to buy or become associated with (as an owner, employee, director, officer, principal, agent, stockholder, member or partner) a company or enterprise which provides products or services that are, or have the potential to be, sold or marketed to the corporate and/or institutional advertising specialty, promotional products, incentive/award or uniform markets (hereinafter, the "Markets"), provided that the Consultant first offers the Company the opportunity to represent such product or service to the Markets on a basis reasonably consistent with other non-Company owned products or services that the Company represents. In the event that the Company chooses not to represent the Consultant's company or enterprise with respect to such a product or service, the Consultant shall be entitled to market such products or services to the Markets in other manners. This Section 7(d) shall not be construed to apply to products or services directly competitive to the Company's products or services (for example, products such as apparel currently sold by the Company or which the Company is presently licensed to market and sell, bags, eye glass retainers, golf club covers and copper bracelets), which products and services the Consultant may only sell or market to the Markets during the Term through the Company. It shall also not be a violation of Section 7(b) or 7(c) hereof for the Consultant to buy or become associated with an advertising specialty/promotional product dealer, distributor, screen printer or embroiderer (the "Customers") that is currently, or has the potential to be, a customer of the Company, provided that, in such event the Consultant shall, during the term, use his best efforts to carry and promote the use of the Company's products, it being understood that it is customary in the promotional products/advertising specialty industry that the Customers usually carry or represent more than one brand or product, including brands or products other than the Company's. (e) Consultant acknowledges that the services to be rendered by him to the Company are of a special and unique character, which gives this Agreement a peculiar value to the Company, the loss of which may not be reasonably or adequately compensated for by damages in an action at law, and that a material breach by Consultant of any of the provisions contained in this Section 7 will cause the Company irreparable injury. Consultant therefore agrees that the Company shall be entitled, in addition to any other right or remedy, to a temporary, preliminary and permanent injunction, without the necessity of proving the inadequacy of monetary damages or the posting of any bond or security, enjoining or restraining Consultant from any such violation. (f) The Consultant and the Company acknowledge that the provisions contained in this Section 7 above are reasonable and necessary, in view of the nature of the Company, its business and his knowledge thereof, in order to protect the legitimate interests of the Company. (g) If any court or arbitrator determines that any covenant contained in this Agreement, or any part thereof, is unenforceable for any reason, the duration and/or scope of such provision shall be reduced so that such provision becomes enforceable and, in its reduced form, such provision shall then be enforce able and shall be enforced. 8. Compliance with Law. In the performance of the services herein ------------------- contemplated, the Consultant is an independent contractor with the authority to control the details of his work. However, the services of the Consultant are sub ject to the approval of the Company and shall be subject to the Company's general right of supervision to secure the satisfactory performance thereof. The Consultant agrees to comply with all federal, state and municipal laws, rules and regulations, as well as all policies and procedures of the Company, that are applicable to the Consultant in connection with his services to the Company. 9. Successors; Binding Agreement. ----------------------------- (a) The Company shall require any successor to all or substantially all of the business or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. (b) This Agreement and all rights of the Consultant here under shall inure to the benefit of and be enforceable by the Consultant's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees and, in the event of the Consultant's death during the Term, the Company shall pay to the Consultant's surviving spouse (or, if there is no surviving spouse, to his estate) all amounts that would otherwise have been payable to the Consultant hereunder for the remainder of the Term. Except as provided in the preceding sentence, this Agreement is personal to and may not be assigned by the Consultant. 10. Notice. For the purposes of this Agreement, notices, demands and ------ all other communications provided for herein shall be in writing and shall be deemed to have been duly given when delivered or (unless otherwise specified) mailed by United States certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Consultant: Thomas D. Gleason 656 Manhattan Road Grand Rapids, MI 49506 If to the Company or NEBS: New England Business Service, Inc. 500 Main Street Groton, MA 01471 Attention: Chief Financial Officer or to such other address as any party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 11. Disputes. Any dispute, controversy or claim arising out of or -------- relating to this Agreement, including any annexes hereto, or the breach, termination or validity hereof, shall be finally settled by arbitration by one arbitrator in Grand Rapids, Michigan, pursuant to the Commercial Arbitration Rules of the American Arbitration Association then in effect. The parties shall select a mutually acceptable single arbitrator to resolve the dispute or if they fail or are unable to do so, each side shall within the following ten (10) business days select a single arbitrator and the two so selected shall select a third arbitrator within the following ten (10) business days. The arbitrator or arbitrators shall have no power to award any punitive or exemplary damages. The arbitrator may construe or interpret, but shall not ignore or vary the terms of this Agreement, and shall be bound by controlling law. Judgment may be entered on the arbitrator's award in any court of competent jurisdiction. 12. Modification; Waiver; Discharge. No provisions of this Agreement ------------------------------- may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the parties hereto. No waiver by a party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. 13. Validity. The invalidity or unenforceability of any provision or -------- provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 14. Entire Agreement. This Agreement sets forth the entire agreement ---------------- of the parties hereto in respect of the subject matter contained herein and, supersedes the Prior Agreement and all other prior agreements, promises, covenants, arrangements, communications, representations or warranties whether oral or written, by any officer, employee or representative of any party hereto, and any prior agree ment of the parties hereto in respect of the subject matter contained herein is hereby terminated. Notwithstanding the foregoing, the parties hereto agree that, in the event that the Effective Time does not occur, the Prior Agreement shall remain in full force and effect. No agreements or representations, oral or otherwise, expressed or implied, with respect to the subject matter hereof have been made by either party that are not set forth expressly in this Agreement. The Consultant hereby agrees that, immediately following the Merger and pursuant to the Merger Agreement, he shall receive a cash payment in respect of each of his then-outstanding stock options based upon the formula set forth in Section 3.7(a) of the Merger Agreement and that, upon such payment Consultant shall have no right whatsoever to acquire securities of the Company, whether pursuant to an option or otherwise, and that each such option shall be cancelled in full. 15. Counterparts. This Agreement may be executed in several ------------ counterparts, each of which shall be deemed to be an original but all of which to gether will constitute one and the same instrument. 16. Headings. The headings contained herein are for reference -------- purposes only and shall not in any way affect the meaning or interpretation of this Agreement. 17. Governing Law. The validity, interpretation, construction and ------------- performance of this Agreement shall be governed by the laws of the State of Michi gan without regard to principles of conflicts of laws. 18. Indemnification. --------------- (a) The Company shall indemnify, hold harmless and defend the Consultant against reasonable costs, including legal fees, incurred by him in connection with his consultation with legal counsel or arising out of any action, suit or proceeding in which he may be involved with respect to his service with the Company hereunder or as a result of his efforts, in good faith, to defend or enforce the terms of this Agreement. (b) Without limiting the generality of the foregoing, the Company shall indemnify and hold the Consultant harmless with respect to any excise taxes, interest, fees, penalties or other obligations incurred by the Consultant as a result of a final determination that any payment received by the Consultant from the Company or an affiliate pursuant to this Agreement or otherwise is an "excess parachute payment" within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended, including any such excise taxes, interest, fees, penalties or other obligations incurred by the Executive in connection with the receipt by the Executive of payments from the Company pursuant to this Section 18(b). The Consultant shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require a payment under this Section 18(b). Such notification shall be given as soon as practicable but no later than ten business days after the Consultant knows of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Consul tant shall not pay such claim prior to the expiration of the thirty-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Consultant in writing prior to the expiration of such period that it desires to contest such claim, the Consultant shall: (i) give the Company any information reasonably requested by the Company relating to such claim, (ii) take such action in connection with contesting such claim as the Company shall reason ably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, (iii) cooperate with the Company in good faith in order effectively to contest such claim, (iv) permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties, as well as any legal, accounting or other expenses) incurred in connection with such contest and shall indemnify and hold the Consultant harmless, on an after-tax basis, for any excise tax or income tax, including interest and penalties with respect thereto, imposed as a result of such representation and payment of costs and expenses. Without limitation to the foregoing provisions of this Section 18(b), the Company shall control all proceedings taken in connection with such contest and, as its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Consultant to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Consultant agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Consultant to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Consultant, on an interest-free basis and shall indemnify and hold the Consultant harmless, on an after-tax basis, from any excise tax or income tax, including interest or penalties with respect thereto, imposed with respect to such advance or with respect to any imputed income with respect to such advance. The provisions of this Section 18(b) shall survive the termination of the Term. (c) NEBS agrees to be jointly and severally liable for the obligations of the Company under Sections 5 and 18 hereof. 19. Office Equipment. Immediately following the Effective Date, the ---------------- Consultant shall purchase from the Company, at an aggregate price of $100, the IBM Thinkpad, Hewlett Packard Vectra desktop computer, NEC computer monitor, Hewlett Packard printer, office desk and computer table which had been previously provided to the Consultant by the Company. IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first above written. PREMIUMWEAR, INC. By: /s/ David E. Berg ------------------------------- Its: Chief Executive Officer ------------------------------ NEW ENGLAND BUSINESS SERVICE, INC /s/ Robert J. Murray ---------------------------------- By: Robert J. Murray Its: Chairman, President and Chief Executive Officer /s/ Thomas D. Gleason ---------------------------------- Thomas D. Gleason -----END PRIVACY-ENHANCED MESSAGE-----